Safe havens aren’t behaving like they used to. Here’s what’s changed
Gold rose on Thursday as growing conflict in the Middle East spurred investors into the safe-haven asset, while a weaker dollar also supported prices.Photographer: Damian Lemanski/Bloomberg via Getty Images
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When markets crash, investors usually know where to hide: U.S. Treasuries, the Japanese yen, and gold.
However, in 2026, this tactic did not work as expected. Treasury yields have risen since the start of the Iran war, the yen has fallen to decades-lows against the dollar and gold has fallen sharply from its peak in January.
That’s because this isn’t a classic risk-off period, strategists say. Investors continue to chase gains in AI-linked stocks as inflation fears, high real yields, fiscal concerns and wide interest rate gaps dampen the usual demand for security.
Frederic Neumann, HSBC’s chief Asia economist, told CNBC that underlying risk appetite remains healthy and global financial conditions are highly accommodative.
US markets and some Asian markets are reaching record highs as investors turn to AI-related names. Nvidia And Intel United States side and Samsung Electronics, SK Hynix And Taiwan Semiconductor Manufacturing Company in Asia.
His view is supported by Henning Potstada, global head of multi-asset at asset manager DWS.
“The driver for stocks is EPS growth; that’s the only driver that matters for stocks over the long term, and EPS estimates are rising,” Potstada told CNBC.
Bonds and inflation
With all the geopolitical uncertainty going around right now, bonds have failed to achieve safe flows due to two factors: inflation expectations and debt sustainability.
He explained in DWS’s Mail: “We had the Iran war which led to the closure of the Strait of Hormuz. [and] “It led to oil prices rising from $60 to $120, which led to inflation forecasts, or actually realizing that inflation was rising, and that’s where bond markets are driven by inflation expectations, not growth.”
Rising inflation expectations generally make bonds less attractive because they erode the purchasing power of future fixed interest payments, causing existing bond prices to fall.
As for debt sustainability, despite strong investor confidence The U.S. federal deficit has caused some concern, the Treasury said.
Last year, Rob Kaplan, a Goldman Sachs vice president, said: “We’ve always talked about deficits, but we’re more leveraged on a net debt basis than we’ve ever been in our lifetimes.”
At the time, Kaplan said the country’s estimated budget deficit of around $2 trillion, accounting for about 6-7% of GDP, was historically high outside of a recession.
But the real numbers were lower. The United States is on track to run a federal budget deficit of roughly $1.9 trillion, or 5.8% of GDP, in fiscal 2026. Congressional Budget Office.
gold doesn’t shine
As for gold, while the yellow metal has traditionally been sought after by kings and the poor throughout history, the weak gold price has surprised experts.
Billy Leung, investment strategist at Global X ETFs, was clear on this. “Gold has not acted as a pure safe haven lately.”
“Stronger USD and higher real yields tend to dominate price movements even during periods of volatility,” he added.
While DWS’s Postada also agrees that gold’s price action is “unusual”, he thinks it could be due to retail and leveraged flows.
He noted that many retail investors flocked to the gold market during last year’s rally, and now volatility is being driven more by this “fast money.”
“Structurally, we still think gold is a good safe haven,” he added.
While Yen is coming out
When asked about yenexperts were more skeptical. The Bank of Japan’s deviation from policy path, Japan’s debt sustainability and weakness in its currency have led some to suggest that the yen may not be the safe haven it once was.
Rising interest rates generally strengthen the currency, but despite the Bank of Japan raising its policy rate to a 30-year high, Japanese government bonds Following a record $74 billion intervention, the currency has fallen to its lowest levels in a decade against the dollar.
As of July 3, the yen was hovering around the 162 level against the dollar.
Tokyo’s debt-to-GDP ratio is staggering 204.4% by 2026The most in the world, according to the International Monetary Fund.
““The yen has become less reliable given the policy divergence with the Bank of Japan and its sensitivity to yield differentials,” Leung said.
In other words, safe havens have not disappeared but have become much less predictable. Treasuries, gold and the yen are increasingly responding to their own macro fundamentals rather than rising together when markets shake.
For investors, this means the old crisis playbook may no longer be sufficient, and building resilience may require a broader mix of assets rather than investing in a single traditional haven.
