5 July 2023
The decline in the US dollar price of gold over the past two months is overshadowed by its strong performance since early 2022. Gold’s shift away from its correlation with the 10-year TIPS yield is seen as bullish. The traditional pricing model, which linked gold to TIPS, has been challenged by geopolitical events and changing market dynamics. Gold’s sensitivity to real rates remains, but the widening gap between gold and real rates suggests a new era for its pricing. Despite negative sentiment, contrarians see potential for a bottoming out and a possible turning point in the gold market.