US yields on 30-year government bonds have risen for the sixth consecutive time, marking the highest level in over two decades — since 2002. This is the environment in which gold usually falls. Instead: The gold price is trading at 4,194.48 US dollars per troy ounce, gained 1.6 percent the previous day, and is holding its course. This resilience requires explanation — and for investors, it is the truly interesting signal.
When the yield on 30-year US Treasury bonds rises for six consecutive trading days, reaching its highest level since 2002, the bond market sends a clear message: investors demand more compensation for lending money to the US government for thirty years. This happens for two reasons.
First: Inflation expectations. Brent oil is trading at 102.70 US dollars per barrel — an increase of around 70 percent since the beginning of the year. Energy drives inflation, and persistently high energy inflation causes bond investors to demand higher yields to compensate for the loss of purchasing power. Second: Interest rate expectations. The Fed only made its first rate hike since 2023 in mid-October. The market is pricing in that further hikes could follow — this pushes down the prices of long-term bonds and drives up their yields.
According to conventional market logic, gold should fall in this environment: rising yields increase the opportunity cost of non-interest-bearing gold. In fact, gold ended September down about six percent but has since recovered. Three factors explain the current stability:
Brent oil at 102.70 USD is a double-edged sword for gold. On the one hand, high oil prices drive inflation — which increases the need for purchasing power protection and supports gold in the long term. On the other hand, it increases pressure on the Fed to raise interest rates — which puts pressure on gold in the short term.
Interestingly: In the current market environment, the inflation protection effect (positive for gold) seems to be acting more strongly than the interest rate hike effect (negative for gold). This is one of the reasons why gold is not breaking down despite the rise in yields.
This could change as soon as Saudi supply increases significantly lower the oil price — then the inflationary pressure would also subside, and with it, one of the most important pillars of support for gold.
Two data points are in focus in the short term: the US labor market report and the PCE inflation data (Personal Consumption Expenditures). A strong labor market would make further interest rate hikes more likely — negative for gold. Weak employment data could reduce pressure on the Fed and give gold a boost.
In the medium term, the overall picture remains bullish for gold: global national debt at record highs, structural inflation due to energy and AI infrastructure, and ongoing geopolitical tensions. In the short term, the struggle between interest rate hike expectations and the crisis premium remains open.
Regarding the gold price forecast of the banks: Gold Price Forecast of the Banks: Why Experts Remain Confident Despite Correction. On the connection between oil, Iran, and gold: Gold Price Iran Conflict: When Oil Rises and Gold Still Falls.
When the Fed raises short-term key interest rates, the yields on short-term bonds initially rise directly. Long-term yields (ten years, 30 years) react more complexly: they rise if the market expects inflation to remain high in the long term or if further interest rate hikes follow. The sixth consecutive rise in the 30-year yield shows that the market is pricing in structurally higher interest rates for the future.
Very high bond yields increase the pressure on non-interest-bearing gold — because investors can now receive more yield through government bonds. The fact that gold is nevertheless holding firm is a sign that other factors (inflation, geopolitics, central bank demand) are overcompensating for the yield effect. Historically, the pressure on gold ends once bond yields have reached their peak — which then often gives the starting signal for the next gold rally.
At a USD gold price of 4,194.48 USD and an EUR/USD exchange rate of around 1.10, this corresponds to an EUR gold price of around 3,813 EUR per troy ounce — a direct calculation from the exchange rate and price. Fluctuations in the exchange rate can change the EUR price by one to two percent daily without the USD price moving.
The clearest historical parallel is the environment of the financial crisis: US bond yields were elevated, yet gold rose from around six hundred to almost two thousand USD — because financial crisis risks and inflation concerns had a stronger effect than the interest rate effect. Whether the current situation develops a similar dynamic depends on how long geopolitical tensions and inflationary pressures persist.
This article is for general information purposes only and does not constitute investment advice. Investments in precious metals involve risks. Please consult an independent financial advisor when making investment decisions.
