Real rate → Gold

Common explanation (Cause · opposite direction): Gold pays no interest, so the higher the real rate, the higher the opportunity cost of holding gold.

This issue: Real rate at 100 (hot), Gold at 84 (hot) — both above normal, not in line with the common explanation (this is an inverse link).

Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.

Where it stands now

Where the two indicators stand this issue

Real rate: Now 2.89%. Gold: 108% above its 10-year average.

Tests

Does this link hold up?

Common explanationGold pays no interest, so the higher the real rate, the higher the opportunity cost of holding goldSource: Federal Reserve Bank of Chicago, “What Drives Gold Prices?” (2021). Separately, the ECB’s November 2024 Financial Stability Review notes that the negative link between real rates and gold reversed markedly after 2022.
Tested against our dataAgreement between the positions of Real rate and Gold (same month), measured in the direction of the common explanation: −0.44 (an opposite-direction link: the raw correlation is +0.44, and a negative correlation fits, so the sign is flipped). Looking at every 5-year period (shifted one year at a time), the two moved in that direction in 7 of 9; data start only in 2012. In most periods the two moved the way the common explanation says, but over the whole history the direction is the opposite: the relationship may have flipped in some eras.Our data show the opposite
Periods when it did not holdAcross 9 5-year periods, out of step in 2019⁠–⁠2025.

History

The two lines, overlaid

Data: Federal Reserve H.15 (DFII10), via FRED (Federal Reserve Bank of St. Louis); World Bank Pink Sheet (CC BY 4.0). Positions: our calculation.

Real rateGold

Limits

What this card cannot tell you

Moving together does not prove that one causes the other.
Links change over time; periods when this one did not hold are listed in full.
This is the historical record, not a forecast.

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