Gold Price Breaks Below $4,000 Toward a One-Year Low as Real Rates Bite

Gold is trading below $4,000 on Monday, pressing toward a one-year low. The metal is changing hands near $3,913, more than 3% below Friday's $4,051.60 settle, and it is testing the $3,879.30 floor that has held the metal at bay through most of the year.

The cause is not geopolitics and it is not a buyers' strike in the vaults. It is the carry cost. With the 10-year Treasury near 4.98% and core PCE holding at 3.12%, real yields are positive and meaningful, and a zero-yield, no-cashflow asset like gold has to be financed against that interest rate every single day. Higher real rates turn bullion from a quiet store of value into an expensive, non-yielding position that has to clear an ever-risin…