Gold Rises with Yields Amid Fiscal Anxiety and Dollar Weakness

Gold prices are rising in tandem with surging U.S. long-term Treasury yields, an unusual divergence that suggests markets are interpreting higher rates as a symptom of fiscal anxiety rather than economic strength.

The 30-year Treasury yield has broken above 5.3%, its highest level since 2007, yet gold futures have climbed above $4,600 per ounce intraday. Spot gold traded around $4,536.7 per ounce, marking its highest level since early June and on track for a third consecutive weekly gain of approximately 3.6%.

Morgan Stanley projects that after gold breaks above $4,450 per ounce, it could surpass $5,000 by 2027 or earlier. The bank noted that gold ETF demand is rising amid weakening expectations for Federal Reserve rate hikes and dollar softness, while central bank purchases and physical demand continue to support prices.

Yuanta Securities emphasized that gold mining equities, with their high fixed-cost structure, offer greater upside elasticity than spot gold. The VanEck Gold Miners ETF (GDX) surged 36.5% over the past month, significantly outperforming the SPDR Gold Shares (GLD) spot gold ETF's 12.3% gain.