Defying gravity, gold’s abnormal price action continues. It has decoupled from the US dollar completely, and from the bond markets, with yields rising alongside gold, which hardly ever happens. Clearly, haven flows and central bank buying are bigger considerations for traders than the continued ascend of bond yields, which in theory should be increasing the opportunity cost of holding non-interest-bearing assets. For example, the US 2-year is almost providing a 5% nominal yield right now. By keeping their capital tied in gold, investors are foregoing this “risk free” return in government bonds. At some stage, the ... (full story)