As the yen's downtrend continues, the need for currency hedging in gold investments is once again being debated. Hedging as a risk-management tool is attracting attention in light of intervention by the government and the Bank of Japan, as well as developments in market positioning.
As the yen's weakness continues, Japanese investors in foreign-currency-denominated assets may benefit from the boost to returns as the yen depreciates. At the same time, because gold and the yen both have safe-haven characteristics, there have been periods when the simultaneous depreciation of the yen and rise in gold prices offset gold's yen-based returns.
With the direction of the market becoming more difficult to predict due to foreign exchange intervention by the government and the Bank of Japan, the role of hedging is being reassessed, with greater emphasis on stability rather than simply maximising returns.
In the short term, the high level of yen-selling positions is seen as a factor that could increase the likelihood of short covering in some circumstances. In April 2026, the dollar rose to the upper ¥160s against the yen, prompting intervention, and the market was subsequently seen moving back into the ¥160 range.
Over the long term, unhedged gold investments have generated high returns on the benefit of the yen's depreciation trend. However, hedging is regarded as important insurance that reduces uncertainty and enhances the stability of yen-denominated returns.