Negative real interest rates generally create a favorable environment for Gold, leading to increased demand and often higher prices. Here's why:
Reduced Opportunity Cost
Inflation Hedge
Store of Value / Safe Haven Demand
Currency Devaluation
In essence: When conventional investments offer a guaranteed real loss, gold, despite offering no yield, becomes comparatively more attractive as a means to preserve and potentially grow wealth over time. Important Nuance: While negative real rates are a strong positive driver for gold, they are not the sole factor determining its price. Other variables like U.S. dollar strength, geopolitical events, demand from jewelry and industrial sectors, and central bank gold buying/selling also play significant roles. |