5.29.25 - Why is Gold Rising Despite High Treasury Yields?

Gold last traded at $3,317 an ounce. Silver at $33.32 an ounce.

Why is Gold Rising Despite High Treasury Yields? -Investing Haven

Gold prices continue to climb even as Treasury yields rise, driven by fiscal concerns, central bank demand, and shifting monetary policy expectations.

Gold prices typically fall when Treasury yields rise. After all, rising yields increase the appeal of interest-bearing assets, making gold, which pays no yield, relatively less attractive. But in May 2025, gold has defied that logic.

Spot gold prices surged to $3,336.43 per ounce on May 21, up 0.7% in spot transactions, marking the highest level since May 9. U.S. gold futures also rose 0.7% to $3,337.60.

This marks four consecutive days of gains, part of a 4% rise this week and more than 25% since the beginning of the year.

A major driver behind this divergence is growing investor unease over U.S. fiscal policy. The Treasury's recent $16 billion 20-year bond auction saw weak demand, triggering a broader sell-off in bonds and pushing the yield on 30-year Treasurys to 5.1%.

Yields on 20- and 30-year notes were last seen at 5.136% and 5.128%, respectively. The benchmark 10-year Treasury yield rose to 4.593%.

These surging borrowing costs, following Moody's downgrade of the U.S. credit rating and ahead of the passage of a major tax-and-spending bill likely to add trillions to the national debt (now at $36.2 trillion), have prompted some investors to rethink Treasurys as a safe-haven asset.

In this environment, gold has gained favor as a hedge against fiscal instability and geopolitical tension.