Gold is down more than 20% from its record — has the safe-haven trade broken? - Mitrade

AI desk brief

Spot gold is around US$4,295/oz on Sept. 24, roughly 22% below its January record US$5,594.82, as higher Treasury yields, a stronger dollar and renewed Fed tightening expectations overwhelm traditional safe-haven demand. The article argues gold’s weakness reflects rising opportunity cost rather than the end of defensive buying, with US Treasuries now yielding around 5% and the Fed’s target at 3.75%–4.00% with another hike still possible before year-end.

ETF demand remains firm despite the price drop: global physically backed gold ETFs drew US$18bn in August, holdings rose 121t to a record 4,189t, and AUM reached US$615bn. Near-term direction hinges on real yields and Fed guidance; softer growth or easing rate expectations would likely relieve pressure on bullion, while persistent inflation and further tightening would keep gold under strain.