Gold's Unpredictable Dance with Interest Rates: Morgan Stanley Reveals a Weakening Bond

Morgan Stanley’s recent analysis highlights a significant shift in how gold prices react to US interest rates and bond yields. Traditionally, gold prices have been influenced by the US dollar and inflation-adjusted bond yields, but this relationship notably weakened in the latter half of last year. Despite the decrease in US real yields, gold didn’t gain as much as expected, partly due to escalating geopolitical tensions. Morgan Stanley analysts observed that gold’s connection with real yields has evolved, displaying reduced sensitivity to yields while increasingly being perceived as a safe haven asset.