1.10.25 - Why investors are still buying gold

1.10.25 - Why investors are still buying gold

Gold last traded at $2,690 an ounce. Silver at $30.41 an ounce.

Why investors are still buying gold despite a strong dollar and rising Treasury yields -MarketWatch

Gold futures are trading 1.8% higher so far in the new year. 

Gold prices settled Thursday at their highest level in four weeks, defying their usual inverse relationship with strength in the U.S. dollar and gains in Treasury yields, as fiscal worries prompt investors seek out safe-haven assets. 

"Dollar strength, rising Treasury yields and a rising gold price are all evidence of global concerns with the U.S. fiscal situation," Brien Lundin, editor at Gold Newsletter, told MarketWatch. "The 'bond vigilantes' are demanding higher returns in light of the risk that Treasurys represent, with the U.S. debt and deficits at such elevated levels relative to GDP." 

"The dizzying rise in the 10-year Treasury yield began with the [Federal Reserve's] rate cuts, and that's not coincidental," Lundin said. "The fact that the Fed may be losing some control over rates is in itself concerning, and is also adding fuel to the rise in yields." 

Meanwhile, despite U.S. fiscal concerns, the dollar is strengthening because it "represents a safe haven in times of trouble, and also because of those higher yields," Lundin said.