Gold Now A Better Diversifier Than Bonds, BlackRock's Vivek Paul Explains
The diminishing safe-haven status of both bonds and the dollar pushes higher the attractiveness of gold as a reliable alternative.
Swamped with uncertainties, the global and domestic investors have run to gold as their last resort to hedge against risks. Gold has been emerging as a compelling safe-haven asset that also offered portfolio diversification.
According to Vivek Paul, head of portfolio research at BlackRock Investment Institute, the current environment that has pulled back the stability of other traditional diversifiers, is paving the way for yellow metal to shine.
Challenging Traditional Safe Havens
One of the key factors that have been pushing gold's appeal higher is the lower effectiveness of other conventional safe-haven assets.
During periods of global growth slowdown, long-dated US government bonds have in the past served as a reliable flight to safety. Despite this pattern in the past, Paul explains that the current economic climate is quite different from these.
The yield on US 10-year Treasury recently touched a low of 3.87% on April 4, and is presently hovering around 4.17%.
Paul also cited the US dollar, that is another traditional safe-haven asset, which has shown signs of faltering in its expected role.
"Part of traction for gold in the near term is that other diversifiers like bonds and the dollar cannot play the safe-haven role. Dollar, since April, has not been able to play the safe-haven role," Paul noted.
The diminishing safe-haven status of both bonds and the dollar pushes higher the attractiveness of gold as a reliable alternative. The precious metal has soared by 24.6% in 2025 and so far, and recently crossed the $3,500-mark in the global market on April 22.
A Better Bet In The Short Term
Considering the challenges faced by traditional diversifiers in the current environment, gold stands out as a promising asset in the near term. As uncertainties cloud the outlook on various other diversifiers, Paul highlights that gold provides a better bet for investors.
"Looking at a longer horizon is even more difficult because there are parts that are different from one another. There are outcomes that may happen in five to ten years that come from remarkably different world views," he said.
The near-term hedging that investors are looking for, favours gold as a safe-haven commodity.
"In the short term, there is a reason and a rationale for gold being a comparatively better bet than other traditional diversifiers," Paul noted.
