Gold Defies Conventional Wisdom with Rally Amid Rising Treasury Yields

Gold prices have surged to $3,336.43 per ounce, marking a 0.7% gain on May 21 and reaching the highest level since May 9. This upward trajectory defies the typical inverse relationship between Gold and Treasury yields, which have climbed to 5.1% on 30-year bonds.

Investors are flocking to gold as a hedge against fiscal instability, driven by weak demand at a $16 billion 20-year Treasury auction and Moody’s recent U.S. credit rating downgrade. The metal has gained 4% this week and over 25% year-to-date, signaling a shift in safe-haven preferences.

Central banks, particularly in emerging markets, are accelerating gold acquisitions, further supporting prices. This trend underscores growing skepticism about traditional debt instruments as the U.S. national debt balloons past $36.2 trillion.