Gold Soars as Yield Curve Inverts for Longest Period on Record

The yield curve has inverted when short-term Treasury yields rise above long-term Treasury yields, which is unusual because it implies investors are willing to accept a lower return on a 10-year bond than on a 2-year bond. This inversion occurred in July 2022 and lasted approximately 26 months before the 10-year yield re-crossed above the 2-year yield in September 2024.

The yield curve has preceded every U.S. recession since 1955, making it the most reliable single recession predictor economists have. When the Fed raises short-term rates aggressively to fight inflation, borrowing costs for businesses and consumers rise sharply, loan demand falls, and banks' net interest margins compress.

During the 2022 to 2024 inversion, gold rose substantially despite higher real yields, because central bank buying added a structural demand floor beneath gold that operates alongside the yield cycle. Central banks purchased 863 tonnes of gold in 2025 alone, the fourth-largest annual figure on record.