Gold Holds Steady Near Records Amid Strong Dollar Pressure

Gold has been trading in a narrow band of $4,250, $4,400 per ounce, despite being pressured by a strong US dollar at two-month highs. This is due to several offsetting forces, including strong Asian physical demand and ongoing central-bank purchases of bullion.

The usual relationship between gold and real Treasury yields has weakened, even as those yields reached 20-year highs. This shift is linked to concerns about rising US public debt and financial-stability risks.

Historically, rising real Treasury yields have acted as a drag on gold prices. However, this traditional correlation has broken down due to investors favoring gold over government debt due to rising fiscal stability risks.

Central banks have been buying an average of over 1,000 metric tons of gold annually between 2022 and 2026, while Chinese gold ETFs added 44 tonnes in August 2026 alone. This physical support provides a robust floor that limits downside risks for long positions.