Gold Ignores Rising Yields as Central Banks Keep Buying

Gold remains above $4,000 an ounce despite rising Treasury yields, which have climbed to multi-decade highs and increased the cost of holding non-interest-bearing assets. The iShares 20+ Year Treasury Bond ETF (TLT) has dropped 11.4% year-to-date, while the SPDR Gold Shares ETF (GLD), tracking physical bullion, has declined by just 4.7%. Policymakers at the London Bullion Market Association’s annual conference in Sorrento, Italy, highlighted gold’s role as a safe-haven asset amid high geopolitical risks and economic fragmentation. Sergio Nicoletti Altimari, deputy governor of the Bank of Italy, emphasized gold’s enduring value during crises, while Bundesbank President Joachim Nagel noted its importance for diversifying reserves despite rising bond yields.

A structural shift in the gold market since 2022 has been driven by central bank purchases, particularly in emerging economies. This shift has weakened gold’s usual inverse relationship with real yields. Metals Focus forecasts central bank demand will slow to 15%, or 720 metric tons, by 2026, though this remains above pre-2022 levels. Central banks reported net purchases of 39 tons in August, totaling 170 tons year-to-date. Poland and China have been notable buyers, while Turkey and Russia have led sellers, though the World Gold Council attributes monthly swings to operational factors rather than long-term strategy changes.

Reserve managers are also optimizing gold storage for better liquidity. For example, De Nederlandsche Bank recently moved 86 tons of gold from New York and Ottawa to London. Meanwhile, retail investors have largely ignored the rally. Frank Giustra, CEO of the Fiore Group, described gold as a hedge against “all human stupidity” and noted that ordinary investors remain largely unexposed to the gold market. In China, investment and institutional buyers are increasingly driving demand, with bar-and-coin purchases overtaking jewelry for the first time in 2025.