Gold rose on Thursday as the widening Middle East conflict drove investors towards the safe-haven asset, while a softer dollar also lent support to prices.Photographer: Damian Lemanski/Bloomberg via Getty Images
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When markets buckle, investors usually know where to hide: U.S. Treasurys, the Japanese yen and gold.
But in 2026, that playbook has not worked as expected. Treasury yields have climbed since the Iran war began, the yen has weakened to multi-decade lows against the dollar, and gold has fallen sharply from its January peak.
The reason, strategists say, is that this is not a classic risk-off episode. Inflation fears, higher real yields, fiscal concerns and wide interest-rate gaps are overwhelming the usual demand for safety — while investors continue to chase gains in AI-linked stocks.
Frederic Neumann, chief Asia economist at HSBC, told CNBC underlying risk appetite remains healthy and global financial conditions highly accommodative.
U.S. markets, as well as some Asian ones, have been hitting record highs as investors pile into AI-related names such as Nvidia and Intel stateside, 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 of equities is EPS growth, that’s the only driver that matters on the long run for equities, and EPS forecasts are going up,” Potstada told CNBC.
Bonds and inflation
With all the geopolitical uncertainty currently swirling around, bonds have not seen flight to safety flows because of two factors: inflation expectations and debt sustainability.
Postada of DWS explained: “We had the Iran war, which led to a closure of the Straits of Hormuz, [and] led to oil prices going from $60 to $120, leading to inflation forecasts, or actually, realized inflation moving up, and this is the situation when bond markets are not driven by growth but driven by inflation expectations.”
Rising inflation expectations generally make bonds less attractive, as they erode the purchasing power of future fixed-interest payments, causing current bond prices to drop.
As for debt sustainability, despite strong investor confidence in Treasurys, the U.S. federal deficit has caused some worries.
Last year, Goldman Sachs vice chairman Rob Kaplan said: “We’ve always talked about deficits, but we’re more highly leveraged on a net-debt basis than we’ve been in our lifetimes.”
At the time, Kaplan said that the country’s projected budget deficit of around $2 trillion, which is about 6-7% of GDP, is historically high outside of a recession.
However, actual numbers were lower. The U.S. is on track to run a federal budget deficit of roughly $1.9 trillion, or 5.8% of GDP, in the 2026 financial year according to the Congressional Budget Office.
Gold not glittering
As for gold, while the yellow metal has traditionally been sought out by kings and paupers throughout history alike, the anaemic gold price has puzzled experts.
Billy Leung, investment strategist at Global X ETFs was unequivocal. “Gold hasn’t behaved like a pure safe haven recently.”
“It’s been weighed down by a stronger USD and higher real yields, which tend to dominate its price action even during periods of volatility,” he added
While DWS’ Postada also agreed that the price action of gold was “unusual,” he thinks this could be due to retail and leveraged flows.
He pointed out that many retail investors piled into the gold market during the rally last year, and now volatility is being driven more by this “fast money.”
“Structurally, we still think gold is a good safe haven,” he added.
Yen on the way out
When asked about the yen, experts were more skeptical. A divergence from the Bank of Japan’s policy path, Japan’s debt sustainability, and the weakness of the currency has led some to suggest that the yen may not be the safe haven it once was.
Rising interest rates usually strengthen a currency, but despite the Bank of Japan hiking its policy rate to 30-year highs, Japanese government bonds hitting record highs, and a $74 billion intervention, the currency has weakened to multi-decade lows against the dollar.
As of July 3, the yen was hovering around the 162 level against the greenback.
Tokyo’s debt-to-GDP levels stand at a staggering 204.4% as of 2026, according to the International Monetary Fund, the most in the world.
“The yen has been less reliable given policy divergence with the Bank of Japan and its sensitivity to yield differentials,” Leung pointed out.
Safe havens, in other words, have not disappeared but have become far less predictable. Instead of rising together whenever markets wobble, Treasurys, gold and the yen are increasingly responding to their own macro fundamentals.
For investors, that means the old crisis playbook may no longer be enough, and building resilience could require a broader mix of assets rather than betting on a single traditional refuge.
