When Will Rising Yields Benefit Gold?

Over the past two years, Gold has been inversely correlated to bond yields. In a low inflation environment, falling bond yields drive real interest rates lower which benefits Gold. Conversely, rising yields are generally negative for Gold. When long-term yields exploded higher in the second half of 2016, Gold declined hard. Now with long-term yields threatening a potential major move higher, Gold and gold stocks have sold off and there is a risk of further losses. However, at somepoint rising yields can push Gold higher.
To answer the question of when we must understand what drives Gold.
Gold performs best amid falling or negative real interest rates. That occurs when inflation is rising faster than interest rates or when interest rates are falling faster than inflation.

This post was published at GoldSeek on Tuesday, 31 October 2017.