Gold is holding a $4,250–$4,400 per ounce range even as the dollar climbs to two-month highs and Treasury yields sit at 20-year highs — a break from the old inverse relationship between gold and yields. Strong Asian demand, recovering ETF holdings, and active central bank bullion purchases are offsetting the pressure, according to FxPro's analyst team.
Gold has been stuck in a consolidation phase between $4,250 and $4,400 per ounce, pressured by a dollar that has risen to two-month highs. The dollar is gaining ground amid growing expectations of significant Fed policy tightening in the coming quarters, according to FxPro's analyst team.
Yields no longer weigh on gold
In recent weeks, gold has stopped reacting to real Treasury bond yields, which have climbed to 20-year highs. Historically, rising rates in the debt market have been a headwind for the non-interest-bearing metal. FxPro's analysts point to investor concern over rising US public debt and financial stability as one reason for the break in that correlation.
However, if the rise in yields instead reflects a strong US economy competing with hyperscalers for resources, that would be negative for gold. BMI expects gold to fall in the long term against faster-than-expected global economic growth. Rising energy prices and broad monetary tightening, though, would hold back the global economy — and the more central banks raise interest rates, the worse that is for growth and the better it tends to be for gold, a pattern that let the metal recover lost ground in previous hiking cycles after initial setbacks.
Physical demand keeps the floor intact
A collapse did not occur this time because of strong demand for the physical asset. In the first eight months of 2026, China imported more gold than in all of 2025. Its ETFs added 44 tonnes in August, 18% more than the same period last year.
Central banks are buying, on average, twice as much gold in 2022–2026 as they did in 2010–2021, FxPro's analysts note. The share of gold in gold and foreign exchange reserves now exceeds, in value terms, the share held in US Treasuries — and regulators typically do not base their purchasing decisions on opportunity cost, which may help explain the divergence between gold prices and Treasury yields.
Source: ActionForex
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