Once upon a time, and in truth, as recently as four years ago, there was a strong relationship between the spot price of gold and the inflation-indexed market yield of 10-Year Constant Maturity U.S. Treasuries.
It was an inverse relationship. When the inflation-adjusted interest rate on the 10-year bonds fell, signaling an increase in inflation, the price of gold would rise. And vice-versa. If the inflation-adjusted yields of these treasuries rose, indicating falling inflation, the price of gold would fall as well.
That made a sort of sense. But that relationship has broken down in the last four years. Starting from 17 March 2022, when the Federal Reserve finally acted to hike interest rates to combat the high inflation unleashed by the Biden administration a year earlier, the relationship between the inflation-indexed 10-year Treasury and gold spot prices has steadily broken down.
We can see that in the following chart, in which the price of gold has fully decouples from the interest rate of the inflation-protected 10-year Treasury.
Most of this decoupling has taken place since 27 December 2023. At that time, the yield of the inflation-indexed 10-year Treasury was 1.64% and the price of an ounce of gold was $2,079. Since that date, the 10-year inflation-protected Treasury has ranged between that low and a high of 2.28% on 30 April 2024. Today, that yield is just below the middle of that range at 1.88%.
But the price of gold has soared during this time. In recent months, as the 10-year TIPS yield has ranged between, it soared to reach a high of $5,414.49 an ounce on 28 January 2026. In the weeks since, it has plummeted, losing over 10% of its peak value. All without any big change in the inflation-protected treasury yield.
It's like the carnival game "high striker". Gold prices are rising and falling by huge amounts independently of changes in yields and inflation.
In mathematics, the slope of a vertical line is described as "undefined". Which is to say there is no relationship between it and whatever the horizontal axis represents. In the case of gold prices, inflation, and the yield of 10-year U.S. Treasuries, we can say that in March 2026, no such relationship exists between these three things, nor has there been such a relationship in years.
Perhaps there never was. Or perhaps we're missing a bigger factor that's holding greater sway today. If we are, what do you suppose it is and why has it been able to cause the price of gold to change so much in during the last four years as compared to how it changed during the preceding 15 years?
Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull and bear who are taking turns playing the high striker carnival game that is labeled 'GOLD PRICES' and the bear asks 'DIDN'T THIS GAME USE TO HAVE SOMETHING TO DO WITH INFLATION?".