Gold has continued to strengthen despite a US Federal Reserve rate hike and a sharp rise in real yields, suggesting that the traditional inverse relationship between real yields and gold prices has weakened, according to a release by Monarch PMS.
The release further said that Gold rose to around $4,385 per ounce on September 18, from $4,242 on August 6. Silver also gained 6.5% to around $65.7 per ounce during the period.
Central-bank gold buying accelerates
One of the key factors supporting gold prices has been stronger central-bank demand. Global central banks added a net 23 tonnes of gold in July, while China bought 20.2 tonnes in August, its largest monthly purchase since October 2023.
China's gold holdings have now increased for 22 consecutive months, with around 80 tonnes added in the first eight months of 2026, according to Monarch PMS.
The rise in gold prices has come even as US real yields have moved higher. The 10-year US TIPS real yield rose to 2.65% on September 17, its highest level in almost 18 years, from 2.41% in August. Historically, higher real yields have generally weighed on gold prices.
However, Monarch PMS said bonds have become less effective as an insurance asset in the current inflationary environment, while gold has increasingly taken on that role, according to Dhruv Joglekar, Assistant Fund Manager at Monarch PMS.
Gold holds up after Fed rate hike
Gold's strength has also continued through the Federal Reserve's latest rate decision. The Fed raised rates by 25 basis points on September 16 to 3.75%-4.00%, marking its first rate hike since July 2023.
Gold initially declined following the decision but recovered to around $4,385 by September 18, moving above its pre-meeting level.
According to Joglekar, the move appears more like a catch-up move in line with historical trends following the first rate hike of a cycle, rather than a decisive shift in gold's underlying trend.
Energy risks add to uncertainty
The report also highlighted a renewed energy shock, with WTI crude moving back above $100 a barrel following a mid-September Saudi pipeline attack.
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Monarch PMS said the combination of persistent central-bank demand, rising term premiums and continuing energy risks is challenging the traditional macro signals that previously drove gold prices.
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