Dollar Debasement Trade Fades Out on US Bond Yields
The dollar debasement trade has been driving both gold and Bitcoin prices up until recently. Market analyst Fawad Razaqzada notes that when the U.S. dollar stops falling, the thesis supporting these assets loses its foundation. The shared driver behind the two assets is the bet that the U.S. dollar will lose purchasing power over time.
Rising oil prices are keeping inflation concerns alive and pushing up U.S. Treasury yields, making it harder to justify holding non-yielding assets like gold. Gold carries additional costs such as storage and insurance, which increase every time bond yields climb.
The dollar's strength has been turning into sustained pressure on gold and Bitcoin, with higher bond yields increasing the cost of holding these assets. The shared position of dollar debasement is causing both assets to weaken together rather than independently.