Gold Decouples from Rising Real Yields Amid Fiscal Concerns

The traditional relationship between gold and real yields has been upended, with investors increasingly viewing higher long-term yields as a risk signal rather than an attractive alternative to gold.

US 10-year real yields have reached their highest level in over 20 years at 2.63%, a 76 basis point increase since the start of the year.

Gold-backed ETF holdings, which had previously declined as investors sold off gold during times of high real yields, are continuing to rise despite these elevated levels.

This disconnect between gold demand and real yields suggests that fiscal concerns and rising government debt burdens may be changing the way investors view gold.