Gold Has Held Up Nicely Against A Strong Dollar And Surging Bond Yields

Dollar At 20-Year Highs

I’m most impressed that gold has stayed afloat even as the U.S. dollar has strengthened to 20-year highs against a basket of other major currencies. Since gold is priced in dollars, the two assets have historically shared an inverse relationship, with one falling when the other rises, and vice versa. At the beginning of the pandemic, the dollar spiked as investors sought a safe haven, which put pressure on gold. The value of the dollar is now highly elevated on the back of interest rate hikes, and yet the yellow metal has continued to trade above $1,800 an ounce.

Will S&P 500 Companies Raise Their Dividends To Compete With Treasury Yields?

As I mentioned earlier, government bonds have steadily sold off this year, pushing yields to multiyear highs. (Bond yields rise when prices fall.) The two-year yield was trading as high as 3.45% last week, a substantial increase from 0.78% at the start of the year.

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