According to the World Gold Council, the impact of US real interest rates on gold has receded over the last couple of decades.
by Geoff Candy, MineWeb.com
Conventional wisdom suggests that a turn in US real interest rates will be bad for gold prices.
The logic being that, in the main, investors measure the relative attractiveness of gold as an investment by how much they can earn elsewhere. Thus, when real rates in the Us are negative, it makes sense to hold gold but, when they turn positive, many investors will look to other assets with a better yield.
But, this may well be the case no longer. According to the World Gold Council, the US real rate’s impact on gold has receded over the last couple of decades. The group says, increasingly, “a rise in US real rates has to be seen in the context of rates cycles in other parts of the world, especially emerging markets… US interest rates will likely become only one of many measures to gauge global opportunity costs.”
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