Gold Losing Its Shine

Gold hasn't been a good hedge against inflation over the past highly inflationary year. That's not surprising since this precious metal's price is inversely correlated with the 10-year TIPS yield and with the trade-weighted dollar (charts below):(1) The TIPS yield fell to a record low of -1.19% on November 9, 2021. It then moved higher, especially this year, closing at 0.72% today. This suggests that investors expect that real interest rates will rise as higher nominal rates will soon depress inflation. That's weighing on gold, and so is the higher rate of return on TIPS.