Gold Defies Record Real Yields as Fiscal Concerns Rise

The relationship between gold and real yields has shifted in recent times. Historically, higher real yields made bonds more attractive than gold, but that's no longer the case.

US 10-year real yields have reached a 20+ year high at 2.63%, a 76 basis point increase since the start of the year. However, this hasn't led to a decline in gold-backed ETF holdings as investors cut their exposure to gold through these funds.

This divergence highlights an increasingly notable disconnect between gold demand and real yields. Central-bank buying played a significant role in supporting gold prices during the 2022-23 period when real yields surged, but today, investor demand for gold is showing resilience despite rising real yields.