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John Authers

Record Gold Prices: Real Yields Aren't Really Responsible

While the correlation is clear, causation may be another matter.

Whether gold is cheap or expensive depends on how you look at it.

Whether gold is cheap or expensive depends on how you look at it.

Photographer: PEDRO PARDO/AFP/Getty Images

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Gold is still glittering. The shiny metal has reversed slightly in recent days, but its upward trend remains uninterrupted. It tends to move directly in line with real yields (those on inflation-linked bonds, or the result of subtracting the breakeven inflation forecast from the nominal yield). While gold is only just below the all-time high of more than $2,000 per ounce set earlier this month, real 10-year Treasury yields are only a little above the all-time trough of minus 1% also reached earlier this month: