Rising Rates, Dollar and Gold

As long bond rates have risen, many have called for the end of the bull market in gold and commodities. The logic is that rising rates will support the dollar. A stronger dollar will, in turn, end the gold and commodity bull. The link below provides a classic example of that discussion. I can only caution you to be wary of easy, spoon-feed conclusions. This is an old discussion and tactic. Demand for dollars is not entire a function of interest rates and interest rate spreads.

Rising long bonds yields and rising gold are not mutually exclusive. The 60's and 70's clearly show how rising gold prices (falling dollar) and rising yields can coexist. Any claims or analysis that suggests rising yields will or must support a stronger dollar and weaker gold has ignored the lessons from history.

30-Year and Gold:


30-Year and CRBSPOT:


Source: cnbc.com