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There’s a Correlation Between Gold Prices & Real Rates – Check It Out

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What is driving the gold price higher and how may market fundamentals influence its price in the future?  @A Financial Site For Sore Eyes & Inquisitive Minds

A look at the evolution of gold prices since the great financial crisis shows that movements in gold prices often corresponded to changes in real rates (10-year treasury yields (essentially, a yardstick for the return of risk-free securities) minus inflation). Gold increases when real yields drop, and vice-versa.

Source: Bloomberg, GC1 Comdty and RR10CUS Index

…Looking back over the past 30 years, the negative relationship between gold and real rates has been strong. The highest gold prices were recorded in an environment of low or negative real rates and high rates tallied with low gold prices.

Source: Bloomberg, GC1 Comdty and RR10CUS Index

…The strong performance of gold since mid-2018 occurred concurrently with important developments in the interest rates and inflation complex. Central banks across the world have taken an accommodative stance in the light of macroeconomic uncertainty…

Editor’s Note:  The original article by Gregor Spilker has been edited ([ ]) and abridged (…) above for the sake of clarity and brevity.  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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