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U.S. Bond Markets Are Driving Force Behind the New Gold Rush

  • Low real yields strengthen incentive to buy commodities: SMBC
  • Investors are pouring record amounts into precious-metals ETFs
Gold bars
Photographer: Lisi Niesner/Bloomberg
Updated on

Deepening negative real yields in the U.S. Treasury market are fueling a frenetic rally in gold that’s boosting the precious metal toward a record.

Bullion has gained 24% this year and is about $45 from an all-time high. And with five-year Treasuries now yielding -1.16% once the effects of inflation are stripped out, the lowest close in seven years, there’s little reason to expect a slowdown in precious-metal buying as investors fret about the economic outlook, prospects for further outbreaks of Covid-19 and the impact of central-bank bond buying.