After a meteoric ascent over the past year, the price of gold has tumbled again this week, dropping back below $1,900 a troy ounce. Bank of America, for example, has an 18-month gold price target of $3,000. Investors should be more cautious: The close relationship between real U.S. interest rates and gold suggests that the yellow metal needs a new driver to reach dramatic new highs. In each of those periods, gold prices have risen significantly, but never as much as the 21% they have increased in the past 10 weeks. The 10-year Treasury yield sits at 0.66%, implying that there is almost no expectation of any meaningful increase in interest rates over the next decade.

Source: Wall Street Journal August 12, 2020 08:46 UTC