Economist Peter Schiff argued that rising bond yields may ultimately strengthen gold’s appeal as inflation erodes the real value of fixed-income investments and pushes investors toward alternative stores of value.

Schiff Says Inflation Could Boost Gold

On Tuesday, in a post on X, Schiff said that investors selling gold because of rising bond yields may be misreading the market.

"Traders selling gold today still don’t understand what’s happening," Schiff wrote.

He added, "Rising bond yields won’t compete with gold, they’ll drive more money into gold."

His argument challenges the conventional view that higher yields make gold less attractive because bonds provide investors with income while gold does not.

Schiff instead focused on the impact of inflation on bond returns.

"As inflation causes bonds to lose value, investors seeking to avoid losses will sell and buy gold as an alternative store of value," he said.

Traders selling gold today still don't understand what's happening. Rising bond yields won't compete with gold, they'll drive more money into gold. As inflation causes bonds to lose value, investors seeking to avoid losses will sell and buy gold as an alternative store of value.

— Peter Schiff (@PeterSchiff) August 18, 2026

Treasury Yields Rise as Gold Rebounds

The 30-year U.S. Treasury yield briefly hit 5.323%, its highest level since 2007, while the 10-year yield held above 4.7% as investors demanded higher returns amid inflation and rising government borrowing concerns.

The move came despite fading expectations for a September Federal Reserve rate hike.

Earlier this month, gold rebounded to $4,367 after a weak July jobs report showed the U.S. economy lost 23,000 jobs versus expectations for an 85,000 gain.

Lower Treasury yields and a weaker dollar boosted gold, while strong ETF demand added momentum, with SPDR Gold Shares attracting $896 million in weekly inflows and more than $1.78 billion over the prior month.

Gold Prices Fell as Yields Rose

Last month, Gold prices had fallen more than 27% from their January peak as weaker ETF demand and rising Treasury yields pressured the metal despite elevated geopolitical risks.

Major gold ETFs recorded billions of dollars in outflows, while the 10-year Treasury yield reached 4.70%, increasing competition for gold.

However, technical indicators showed potential signs of a bottom near $3,940, raising the possibility of a rebound toward $4,378.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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