Expert warns: Gold’s status as a safe haven is at risk

• Connection between gold and real interest rates weakened according to experts
• Central banks drive demand for gold
• Risk of a significant correction is emphasized

Gold’s image as the ultimate hedge against currency collapse and geopolitics is cracking. In a recent analysis, economist Robin Brooks questions whether the “debasement trade” – the escape from dwindling paper currencies – has permanently distorted the gold market. According to Brooks, whose theses have appeared on his Substack channel, the metal has decoupled from its fundamental drivers. This means that reliability as a “safe harbor” is at stake.

Gold price shows decoupling

While the theoretical debate is gaining momentum, the real market has seen a mixed picture in recent weeks. After the precious metal briefly exceeded the historic mark of $5,000 per troy ounce at the beginning of 2026, strong fluctuations followed, even though geopolitical developments such as the escalation of the situation in the Middle East had actually suggested rising gold prices. Traders are reporting a “tug of war” between institutional selling due to high real interest rates and ongoing support purchases from Asia.

The break with real interest rates

An iron mechanism has been in effect for decades: If real interest rates fall, gold becomes more attractive because the opportunity costs of the interest-free investment fall. However, this causality now appears to have expired. Brooks states that despite the rapid rise in real interest rates in the USA, gold has remained uncharacteristically stable or even set records. This decoupling process signals that the market has abandoned the rational response to interest rate policy in favor of speculative dynamics. This means that gold loses its most important function as a calculable hedging instrument for institutional investors.

Central bank purchases as an artificial support construct

The current pricing is largely rooted in the aggressive purchasing behavior of central banks, especially in the emerging markets. These actors act less out of concern about inflation than out of strategic calculation to reduce dependence on the US dollar. Brooks argues that these massive volumes artificially cement gold prices and undermine natural price discovery. For private investors, this means an incalculable risk: gold mutates into a plaything of geopolitical interests and loses the predictability that is essential for a haven of refuge.

Institutional skepticism and growing volatility risks

Tilmann Galler, global capital market strategist at JPMorgan Asset Management, also shares this skepticism. He warns of a changing risk profile and emphasizes that the role as a portfolio stabilizer is threatened by extreme price fluctuations and the dominance of speculative capital flows. Galler explains: “Since gold pays neither interest nor dividends, the opportunity costs rise when real interest rates rise. Conversely, falling real interest rates signal the need for monetary protection.” Since 2022, however, this causal structure has been disrupted: “The precious metal is considered a neutral asset that cannot be frozen,” says Galler. Central banks in particular provided significant support for the rally, which reached record levels of over $5,000 at the beginning of 2026. However, Galler is now warning of the increased “fall height” and currently sees material assets such as infrastructure as the more efficient alternatives for protecting against inflation.

The danger of a massive price correction

Robin Brooks’ warning results in a prediction of a severe market correction. Since gold is trading well above the level that classic valuation models would justify, the expert classifies the current valuation as fragile. If the supporting special factors – especially the massive purchases from China – cease to exist, there is a risk of a return to the fundamental anchors. In a high interest rate environment, gold would then have to depreciate massively. Anyone who relies on crisis protection without reservation today is ignoring the profound structural break of the past few years.

Claudia Stephan, editorial team at finanzen.net