Gold-real yield link weakens; central-bank buying accelerates: Monarch Networth Capital
Gold has continued to strengthen despite a US Federal Reserve rate hike and a sharp rise in real yields, suggesting the traditional inverse relationship between real yields and gold prices has weakened, according to Monarch PMS. In its recent report, Monarch PMS said gold rose to around $4,385/oz by September 18 from $4,242 on August 6, while silver gained 6.5% to around $65.7/oz.
Rise comes as central-bank gold buying accelerated
Global central banks added a net 23 tonnes in July, while China alone bought 20.2 tonnes in August, its largest monthly purchase since October 2023. China's holdings have now risen for 22 consecutive months, with around 80 tonnes added in the first eight months of 2026.
Monarch noted that the 10-year US TIPS real yield rose to 2.65% by September 17, its highest level in almost 18 years, from 2.41% in August. Yet gold continued to rise, challenging the historical relationship in which higher real yields generally weighed on the metal. “Bonds have become less effective as an insurance asset during the current inflationary environment, while gold has increasingly taken on that role, says Dhruv Joglekar, Dhruv Joglekar, Assistant Fund Manager at Monarch PMS
Gold has historically firmed after the first hike of a cycle
The uptick in price has held through an actual rate hike. The Fed raised rates by 25 basis points on September 16 to 3.75%-4.00%, its first hike since July 2023. Gold briefly declined following the decision before recovering to around $4,385 by September 18, above its pre-meeting level. According to Joglekar, the price jump—in line with historical trends—currently appears more like a catch-up move than a decisive shift in gold's underlying trend.
The report also highlights a renewed energy shock, with WTI crude moving back above $100 a barrel following a mid-September Saudi pipeline attack. Monarch said the combination of persistent central-bank demand, rising term premiums and persistent energy risks is challenging the traditional macro signals that previously drove gold prices.
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