Gold's Break from Real Rate Correlation Reshapes Pricing Logic

Over the past 12 months, the US 10-year TIPS yield rose to as high as 2.2%, which under historical models should have materially weighed on gold. Yet gold prices not only failed to be suppressed — they continued to set all-time highs. Economists and strategists attribute this divergence to three structural changes: first, multiple central banks are treating gold reserves as a de-dollarization tool, with buying consistently exceeding expectations; second, the widening US fiscal deficit has raised investor concerns about the long-term status of the dollar as the world's reserve currency; third, significantly elevated geopolitical uncertainty has driven a structural increase in safe-haven asset allocation demand. These new drivers have reduced gold's traditional interest rate sensitivity.