Gold Futures Surge as Safe-Haven Demand Overrides Dollar Strength and Rising Yields
Gold futures are up 1.9% in 2025, with prices closing Thursday at a four-week high. This rally defies the typical inverse relationship between gold prices, a strong U.S. dollar, and higher Treasury yields, as mounting fiscal concerns drive investors toward safe-haven assets.
“Dollar strength, rising Treasury yields, and a rising gold’s price all signal global concerns about the U.S. fiscal situation,” said Brien Lundin, editor of Gold Newsletter, in comments to MarketWatch. He noted that “bond vigilantes” are demanding higher returns due to heightened risks associated with U.S. debt and deficits, which remain significantly elevated relative to GDP.
The yield on the 10-year Treasury has surged, gaining 1.07 percentage points from its 52-week low of 3.622% in September to reach 4.704% on Wednesday. Simultaneously, the ICE U.S. Dollar Index (DXY) has risen 0.6% year-to-date. Despite these conditions, gold has remained resilient, with February gold futures climbing $18.40 (0.7%) on Thursday to settle at $2,690.80 per ounce. This marks the highest close since December 12.
“Gold has been performing impressively against the supposed headwinds of rising yields and dollar strength,” Lundin added. “It continues to attract a diverse range of buyers, from central banks to individual investors, as it remains the ultimate safe haven.”
While a stronger dollar and rising Treasury yields typically weigh on gold, current fiscal concerns and the Federal Reserve’s perceived loss of control over rates have amplified gold’s appeal. According to Lundin, these factors are fueling investor demand even as higher yields increase the opportunity cost of holding non-yielding assets like gold.
Gold’s strength in the face of such challenges underscores its enduring role as a financial safe haven in uncertain times.
