For much of 2026, gold faced a clear paradox: geopolitical uncertainty and financial risks remained elevated, yet the metal still came under pressure as real yields rose sharply, increasing the opportunity cost of holding a non-yielding asset.

The key question now is no longer whether real yields are high, but whether they can rise significantly further from current levels.

Pressure from Real Yields May Have Passed Its Worst Phase

According to BCA Research, gold does not necessarily need the Federal Reserve to cut interest rates in order to begin another rally.

What the market may need is simply:

• Real yields to stop rising

• The U.S. dollar to stop strengthening

Monetary policy expectations have changed significantly this year. At the beginning of the year, markets were still anticipating possible Fed rate cuts. Now, investors are considering the possibility of rate increases.

Despite this shift, gold has continued to hold the psychologically important $4,000 per ounce area.

Gold Remains Resilient

The World Gold Council noted that gold ended July at around $4,027 per ounce, nearly unchanged despite continued pressure from elevated yields.

More importantly, European gold ETFs continued to attract inflows even as real yields in the region remained at multi-year highs.

This suggests that gold has absorbed much of the pressure from the high-yield environment without losing its underlying support.

Long-Term Structural Drivers Remain Intact

Alongside the possibility that real yields are approaching a peak, several structural factors continue to support gold:

• Central banks continue to accumulate gold

• The de-dollarization trend remains in place

• Concerns over debt and public finances have not disappeared

• Geopolitical uncertainty remains elevated

These factors could continue to provide a long-term floor for gold prices.

Inflation Could Become Supportive Again

According to the World Gold Council, inflation becomes more relevant for gold when it rises above 4%, particularly when accompanied by:

• Falling real yields

• A weaker U.S. dollar

• Rising recession risks

This means gold does not necessarily need an economic crisis or an aggressive Fed easing cycle to begin rising again.

Conclusion

The bullish case for gold is relatively simple: the forces that have been weighing on the metal may only need to stop getting worse.

If real yields have indeed peaked, the factor that has been gold’s biggest headwind could gradually weaken and potentially become an important source of support for the next move higher.

Source: Kitco