Gold resilient after surge in real rates

8.29.23 - Gold resilient after surge in real rates

Gold last traded at $1,937 an ounce. Silver at $24.73 an ounce.

'We are buyers of gold on weakness': Yellow metal appears resilient after surge in real rates, says Morgan Stanley -MarketWatch

by Christine Idzelis

Gold appears resilient amid the recent surge in real interest rates, presenting a buying opportunity over the intermediate term, according to Morgan Stanley's wealth-management business.

"Like equities, which have continued to shrug off the negative implications of rising real rates, gold GC00, 0.99%, which moves inversely to real rates and in turn to the U.S. dollar DXY, has remained extremely resilient," said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, in a note Monday.

"Regarding the intermediate outlook, we are buyers of gold on weakness or declines in rates," she wrote.

Real rates, which adjust for inflation, have recently jumped. While that eroded equity valuations this month, the U.S. stock market remains solidly higher for the year to date.

"The surge in real rates has been a multifactor move likely to force investors to contemplate valuation risks of a 'higher-for-longer' rate regime," said Shalett. "The 10-year real rate rose above 2.0% last week, its highest since the Great Financial Crisis."