ETF Flows Highlight Gold Decoupling from Real Yields as Fiscal Concerns Drive Demand, Says Saxo Bank’s Hansen

Ole Hansen, Head of Commodity Strategy at Saxo Bank, noted that gold ETF holdings keep climbing even as 10-year real yields reached a 20-year peak of 2.63% on Friday, up 76 basis points year-to-date. This trend points to a weakening of the usual inverse link between yields and gold, driven instead by worries over fiscal sustainability.

Historically, rising real yields pressured gold because the metal pays no interest. Now investors are holding or adding to ETF positions, viewing higher long-term yields as a warning sign of mounting government debt and potential instability rather than an attractive alternative.

Central-bank purchases and Asian demand continue to underpin the market, with ETF holdings hitting a seven-month high. Hansen maintains a bullish stance, arguing that underlying investor interest remains firm despite the Fed’s hawkish stance.