Real interest rates penalize gold

Since the onset of the Middle East war, U.S. real interest rates have significantly influenced gold prices. Historically, gold has an inverse relationship with real interest rates, as rising rates increase the opportunity cost of holding gold. The Ukraine war has shifted risk assessments regarding international reserves, prompting countries like China to diversify their reserves by increasing gold holdings. Despite a 20% drop in gold prices from February to October 2022 due to rising U.S. interest rates, gold prices surged to a record high in January 2024, driven by demand from non-Western countries. However, recent geopolitical tensions have reignited inflation fears and expectations of rising interest rates, causing gold prices to decline nearly 10% since early March 2024. Unlike Bitcoin, which is influenced by tech sector performance, gold remains a stable asset sought by central banks and families, particularly in Asia. The influence of real interest rates persists, but long-term…