Gold and Interest Rates Are Breaking Old Patterns
This chart tells a very interesting story. It shows the price of gold on one side and the 10-year TIPS yield on the other. TIPS are bonds that protect against inflation. The yield shown here is inverted, which means when the line is going up, actual interest rates are going down—and vice versa. The gold price is shown in gold color, and the TIPS yield is shown in blue.
A Strong Link That Lasted Years
From 2006 to 2022, gold and interest rates moved in opposite directions. Whenever interest rates came down, gold prices went up. And when interest rates went up, gold prices fell. This is how things usually behave—lower interest rates make gold more attractive because gold does not pay any interest. So when bonds offer less return, gold becomes a better option. This long-term pattern held strong for over a decade.
A Major Shift After 2022
Something changed in 2022. Gold prices continued to rise, but interest rates also started going up. This is not supposed to happen under normal rules. Usually, when interest rates rise, gold should fall. But this time, gold did not care. And the reason behind this shift is believed to be the Russia-Ukraine war. After sanctions and the freezing of foreign assets, many countries began to realize that they need to store wealth in something that cannot be easily frozen—like gold.
Why This Matters Now
This chart clearly shows that the old relationship between gold and interest rates is no longer holding true. Even in 2025, gold is going higher while interest rates are also high. This tells us that something very important is happening behind the scenes. Countries are continuing to buy gold in large quantities, even though interest rates are not favorable for gold. This is not normal behavior and should not be ignored.
Time to Think About Gold Again
If governments, central banks, and large institutions are buying gold, it might be time for regular investors to think about it too. This shift in behavior means that gold is now being treated as a must-have asset, not just something that shines during low interest rate times. The message is simple—don’t wait too long. Gold is already showing strong signals, and its demand may only grow from here.
On The Momentum Podcast this week
In Episode 2 of The Momentum Podcast, Rajnish, a seasoned investor from Pune, shares his shift from traditional investing to momentum strategies. He talks about avoiding costly mistakes, the real estate vs equity debate, and his approach to gold investing. A must-listen for young investors! Now streaming.
