Gold caught between surging bond yields and rising fiscal concerns

Key arguments

• A stronger dollar and surging Treasury yields have pressured gold, but ETF demand remains robust, highlighting a divide between short-term traders and strategic investors.
• Rising yields reflect fiscal concerns and higher debt-servicing costs, potentially strengthening gold's long-term appeal as a sovereign risk hedge.
• Chinese demand and central bank diversification provide additional support, with lower opportunity cost due to China's low yields.
• Gold's relative strength versus silver signals defensive investor preferences amid economic uncertainty.

Corresponding source evidence

1. • Macro headwinds intensify: In the last month, a 3% dollar rally and a 50-basis-point surge in US Treasury yields have pressured gold, pushing real yields towards 3%.
2. • Gold's resilience faces further tests: Near-term downside risks persist, but continued investment demand could support a recovery once the dollar and real yields stabilise. · near-term
3. Over the past month, a sharp rebound in the dollar, surging government bond yields and a corresponding rise in real yields have increased the opportunity cost of holding the non-yielding metal.