Safe-Haven Assets in a Time of War: Gold, Treasuries, USD and Bitcoin
Safe-Haven Assets in a Time of War: Gold, Treasuries, USD and Bitcoin
As USA-Israel-Iran war escalates, explore how gold, Treasuries, the US dollar and Bitcoin perform as safe-haven assets and what it means for investors.
On 29 February 2026, global markets woke up to headlines of a coordinated military strike by the United States and Israel on Iranian leadership. The attack, launched the day before (Feb 28), triggered retaliatory missile barrages and pushed the Middle East to the brink of a wider conflict. Oil shipments through the Strait of Hormuz were briefly suspended and Brent crude prices - already up about 20 % this year - climbed as traders feared disruptions to one‑fifth of the world’s oil supply. Such escalations often jolt investors into “risk‑off” mode, prompting a scramble for safe‑haven assets. This article examines how gold, U.S. Treasuries, the U.S. dollar and Bitcoin perform during periods of geopolitical stress and what the latest U.S.‑Israel‑Iran flare‑up may mean for these assets.
What Makes an Asset a Safe Haven?
A safe‑haven asset retains or increases its value during market turmoil. Investors look for instruments with deep liquidity, low default risk and long histories of preserving capital. Traditional examples include precious metals, government bonds issued by stable governments and reserve currencies. In recent years, cryptocurrencies such as Bitcoin have been touted as “digital gold,” raising questions about whether they behave like safe havens.
Gold: Time‑tested refuge
Historical appeal and drivers
Gold has been used as a store of value for centuries. VanEck notes that it serves as a safe‑haven investment during financial turmoil and a hedge against severe inflation. The metal enhances portfolio diversification, acts as a store of value and offers protection against systemic risk. Its price tends to rise when investors worry about geopolitical instability: historical data show that gold prices often increase during wars or unrest because geopolitical sensitivity contributes to its “safe‑haven” status. In the current environment, VanEck expects heightened uncertainty, de‑dollarisation and inflation to bolster gold’s appeal.
Recent performance
Since the beginning of 2026, gold has rallied strongly. Reuters reported that gold was up 22 % year‑to‑date before the latest U.S.–Iran escalation and that investors could make another dash for gold amid war fears. Another Reuters report noted that on February 27, just a day before the strikes, gold rose 0.8 % to $5,230.56 per ounce and was on track for a seventh straight monthly gain, helped by softer U.S. Treasury yields and geopolitical tensions. Gold’s run underscores its safe‑haven role: as yields on competing assets fall and geopolitical risk rises, the opportunity cost of holding non‑yielding bullion declines.
Outlook and considerations
Gold’s outlook depends on the conflict’s duration and macroeconomic policy. If war escalates and inflation expectations rise, investors may increase allocations to gold, pushing prices higher. Conversely, if tensions ease quickly or central banks tighten policy aggressively, gold could consolidate or retrace some gains. Nevertheless, the historical resilience of gold suggests it remains a core safe‑haven asset.
U.S. Treasuries: The global risk‑free benchmark
U.S. government bonds are widely regarded as the world’s “risk‑free” asset because they are backed by the full faith and credit of the United States and have deep liquidity. During crises, investors flock to Treasuries, driving yields lower.
Evidence from the current conflict
Reuters’ safe‑haven analysis of the U.S.–Iran tensions observed that the escalation could add to demand for U.S. Treasuries. In the days leading up to the strikes, yields on 10‑year Treasuries slipped to a three‑month low, which made non‑yielding assets like gold more attractive. Lower yields reflect buying pressure; when investors fear equity or credit losses, they prefer the safety of government bonds. Thus, the bond market is already signalling risk aversion.
Longer‑term context
Treasuries’ safe‑haven status arises from the depth of U.S. bond markets and the dollar’s reserve‑currency role. However, investors should note that rising U.S. fiscal deficits, shifting global alliances and potential downgrades of sovereign credit could affect demand over the long term. For now, though, Treasuries remain the primary shelter during geopolitical storms.
U.S. Dollar: Safe haven with caveats
The U.S. dollar has historically acted as a safe haven because it is the world’s dominant reserve currency and most commodities are priced in dollars. Yet its role is evolving.
Recent conflict dynamics
During the June 2025 Israel–Iran war, the dollar index fell about 1 % but regained its losses after a few days. Analysts at Commonwealth Bank of Australia (CBA) emphasised that in the current circumstances, the dollar’s reaction will depend on how large and long‑lasting the conflict is. If the war is prolonged and disrupts oil supplies, the U.S. dollar could rise against most currencies except the Japanese yen and Swiss franc because the United States is a net energy exporter and would benefit from higher oil and gas prices.
Structural considerations
An ING research note cited by Reuters argues that the dollar has lost some, but not all, of its safe‑haven value since 2024. The dollar index dropped almost 10 % in 2025 as erratic trade policy and attacks on the Federal Reserve weighed on confidence. Still, ING notes that there is no broad deterioration in global demand for U.S. currency and that private investors - who hold more than 80 % of foreign holdings of U.S. assets - remain invested. Dollar weakness therefore seems more cyclical than structural; the greenback may still strengthen during crises, but its haven status is not as unquestioned as before.
Bitcoin: Digital gold or risk asset?
Bitcoin is often pitched as “digital gold,” but its behaviour during crises is far more volatile.
Empirical evidence
During the June 2025 conflict, Reuters noted that Bitcoin was an outlier and no longer seen as a haven; it fell 2 % on the day of the escalation and had shed more than a quarter of its value in the prior two months. This contrasts with gold’s double‑digit gains and underscores that cryptocurrencies behave more like speculative risk assets than defensive shelters.
Academic research supports this view. A 2026 study using quantile vector autoregression models found that under normal and bull markets, Bitcoin is a dominant net transmitter of shocks, amplifying risk and aligning with high‑beta assets. In bear markets, its spillover power weakens sharply, and U.S. Treasuries and gold emerge as key shock absorbers, reinforcing their defensive status. The study concluded that Bitcoin offers upside‑oriented diversification but is less reliable than Treasuries or gold as a downside hedge.
What this means for investors
Bitcoin’s decentralised nature and capped supply attract investors seeking long‑term alternatives to fiat currencies. However, its track record suggests it remains a risk asset - prone to large drawdowns and speculative flows. During war‑driven uncertainty, its lack of safe‑haven characteristics means it may not protect capital when equities sell off. Investors should treat Bitcoin as a high‑beta allocation rather than a defensive asset.
Strategic Takeaways for Investors
Diversify across traditional havens. In times of war, gold and U.S. Treasuries have repeatedly demonstrated their defensive qualities. Allocating to both can hedge equity risk and currency volatility.
Monitor the dollar’s role. The U.S. dollar may strengthen if conflict disrupts oil supplies, but its safe‑haven appeal has waned relative to past crises. Investors should watch how geopolitical events interact with U.S. fiscal and monetary policy.
Treat Bitcoin as speculative. Despite its “digital gold” narrative, Bitcoin’s behaviour resembles that of high‑beta assets. It may provide upside during bull markets but tends to transmit risk in stressed markets. Use it cautiously and not as a core defensive asset.
Stay agile. The impact of the current conflict will depend on its duration, regional spillover and responses from major powers. Safe‑haven assets may surge or retreat as news evolves. Maintaining a balanced portfolio and avoiding panic selling can help navigate volatility.
Conclusion
The U.S.–Israel–Iran escalation on February 28, 2026 has reignited fears of wider war and reminded investors of the importance of safe‑haven assets. Gold remains the quintessential refuge, benefiting from centuries‑long trust and a surge of demand during geopolitical stress. U.S. Treasuries continue to provide safety through falling yields and deep liquidity. The U.S. dollar still plays a haven role but its dominance is less absolute. Bitcoin, while innovative, behaves more like a speculative asset and offers little downside protection. Investors should calibrate their portfolios accordingly, balancing traditional safe havens with awareness of new asset classes’ risks.
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