ROTATIONS AWAY FROM SAFE-HAVEN ASSETS
We are arguably living in a new macroeconomic regime marked by persistent geopolitical tensions, elevated inflation and interest rates, trade fragmentation and the lingering after-effects of the pandemic.
In this new macro-environment of high uncertainty and market volatility, the role of US treasuries as a safe-haven asset and the US Dollar as the global reserve currency are under scrutiny. An increasing US fiscal deficit, rising interest debt payments and recent events such as the US treasury sell-off in April after ‘liberation day’, are prompting a re-evaluation of Treasuries as a safe-haven asset. This raises the question: are investors rotating away from US Treasuries in search of alternative safe-have assets?
With US Treasuries exhibiting greater volatility and price sensitivity, they are increasingly being perceived as risk-bearing rather than purely defensive assets. Gold, as a store of value and inflation hedge attracted inflows from both central banks and private investors recently. The price of gold rose rapidly from around $1800 a troy ounce in late 2023 to around $3300 a troy ounce currently. Central banks worldwide have rapidly been increasing their gold reserves, adding 1080.1 tonnes; 1050.81 tonnes and 1044.63 tonnes of gold in 2022, 2023, 2024 respectively. This accumulation reflects an effort to diversify reserves away from the dollar and Treasuries, driven by gold’s role as an inflation hedge, its absence of default risk, and its strong performance during periods of crisis (World Gold Council, 2025). In fact, as reported by the Financial Times on 11 June, gold has overtaken the Euro as the world’s second most important reserve asset for central banks (Financial Times, 2025).
Figure 1: US 10-year Treasury Yield and DXY index YTD. We see a sharp spike in yields after ‘liberation day’ and depreciation of the DXY index.
Source: Bloomberg
Figure 2: Gold is now the second most important reserve asset for central banks
Source: Financial Times and ECB
GOLD’S RAPID RISE AND INCREASING CENTRAL BANK RESERVES SIGNAL A SHIFT AWAY FROM US TREASURIES AS THE PREFERRED SAFE-HAVEN IN TODAY’S VOLATILE MACRO- ENVIRONMENT...
20 | ADMISI - The Ghost In The Machine | Q2 Edition 2025
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