Gold Decouples from US Treasury Yields as Fiscal Risks Rise

The traditional relationship between gold prices and US Treasury yields has broken down, leaving analysts scrambling to understand the new dynamics at play.

The ten-year real yield on US government debt climbed to 2.63% last Friday, its highest reading in over two decades, but instead of hurting gold, it seems to be having little effect.

Charles-Henry Monchau, chief investment officer at Bank Syz, describes the old compass as 'broken', with every basis point now working in gold's favor rather than against it.

This shift is largely attributed to growing unease about America's fiscal trajectory and a hardening skepticism towards Western reserve currencies, following the freezing of Russian central bank reserves in February 2022.