Totality Deep Dive: Gold's tug of war with real yields

Gold’s performance in 2025 marks may indicate structural turning point in how markets interpret real yields, inflation, and diversification demand.

The metal has surged beyond USD 4,000 per ounce, extending a rally that began in mid-2023 despite persistently high real yields.

Traditionally, elevated real yields weigh on gold prices. Yet sustained demand from central banks, reserve managers, and retail investors has redefined that relationship.

This Totality Deep Dive for October 2025 is for general informational purposes only and reflects aggregated market data and publicly available research. It does not consider any reader’s specific financial situation or objectives and should not be used as a basis for investment decisions.

1. Price dynamics and yield relationship

Gold’s multi-year ascent has occurred alongside a US 10-year Treasury Inflation-Protected Securities (TIPS) real yield often surpassing 2%.

Historically, gold and real yields have moved inversely. Since 2022, that correlation has weakened, reflecting heightened geopolitical risk, fiscal uncertainty, and diversification away from traditional yield benchmarks.

2. Central bank accumulation

Official-sector demand remains a key anchor for the gold price. According to the World Gold Council (WGC):

• Central banks purchased approximately 290 tonnes in Q2 2025, bringing 12-month rolling demand to more than 1,000 tonnes, near record highs.
• Around 76% of central banks surveyed expect to increase gold reserves over the next five years.
• Purchases are concentrated in China, India, Türkiye, and Singapore.

This sustained accumulation highlights gold’s role as a neutral reserve asset within ongoing de-dollarisation efforts—attempts by some governments and firms to reduce the use of US Dollars in world trade and global finance.

3. ETF and investment flows

Institutional and retail investors have re-established exposures to gold via exchange-traded products (ETPs):

• Global gold ETF holdings reached 3,838 tonnes by the end of Q3 2025 (just 2% below the 2020 record).
• September 2025 saw +146 tonnes (~USD 13 billion) in inflows to global gold ETFs, the largest increase on record.
• Australian-listed gold ETFs added AUD 1.47 billion YTD, with a further AUD 100 million in early October.

ETF inflows have returned to levels not seen since 2020, underscoring renewed participation across institutional and retail channels.

4. Retail and physical demand

Physical demand for gold remains robust across Asia, with retail participation broadening the demand base and cushioning pullbacks driven by speculative futures activity:

• China: Shanghai Gold Exchange premiums at USD 30–50/oz indicate tight domestic supply.
• India: Imports rebounded 23% YoY in H1 2025 amid festival-driven jewellery demand.
• Australia: Record retail inflows into ASX bullion ETFs parallel heightened consumer interest.

5. Futures positioning and market structure

CFTC data show speculative long positioning near multi-year highs:

• Managed-money net longs ~250,000 contracts (late Sep 2025).
• COMEX open interest up 30% YTD, indicating elevated trading activity.

While leveraged participation supports liquidity, it may also amplify volatility when yields or currencies shift.

6. Currency and policy context

Despite fiscal deterioration, the USD has traded sideways in 2025. Persistent US deficits (>6% of GDP) and ongoing debate over Federal Reserve independence have contributed to a policy-risk premium supporting gold.

At the same time, inflation in major economies remains above target, limiting room for real-yield compression and sustaining diversification demand among both sovereigns and private investors.

7. Cross-metal performance

The precious metals complex has also broadened:

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This relative performance reflects differentiated fundamentals, but a common macro backdrop: geopolitical tension, de-dollarisation, and reserve diversification.

8. Current market structure (as at October 2025)

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9. Market instruments in focus

Recent market data show how participants have used a range of tradable instruments on the Totality platform to express views on gold and the broader metals complex:

Precious metals exposure:

• Spot metals: XAUUSD (gold) and XAGUSD (silver) remain among the most actively traded precious metal pairs on Totality.
• Futures contracts: COMEX Gold (GC) and Silver (SI) futures are available for participants managing rate, inflation, or directional price risk.
• ASX-listed bullion ETFs: Global X Physical Gold ETF (GOLD) and Betashares Gold Bullion ETF (QAU) are among several vehicles that investors can use to gain listed exposure to physical bullion holdings.
• Global ETFs: International ETFs such as SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and Invesco DB Precious Metals Fund (DBP) are also tradable via Totality, broadening exposure across major exchanges.

Related macro and hedge instruments:

• Inflation-linked securities: Vanguard Australian Inflation-Linked Bond ETF (VIF) and global TIPS ETFs are frequently used to hedge real-yield sensitivity.
• FX pairs: AUDUSD and USDJPY remain closely correlated to changes in real-yield expectations and are widely traded as gold-proxy vehicles.
• Mining equities: ASX-listed producers such as Newmont Corporation (NEM), Northern Star Re-sources (NST), and Evolution Mining (EVN) provide indirect leveraged exposure to gold-price momentum.
• Commodity indices: Broader commodity ETFs such as the Global X Bloomberg Commodity Complex ETF (BCCM) enable diversification across metals and energy components.

Mention of specific securities or instruments is for illustration only and does not constitute an offer, solicitation, or recommendation to trade. Examples of listed gold ETFs or mining equities are available globally; these are referenced for educational purposes only.

10. Interpretation of current conditions

Gold’s sustained strength reflects a multi-pillar demand base:

• Central banks remain net buyers.
• Institutional and retail investors have reestablished exposure through ETFs and physical purchases.
• Policy uncertainty and fiscal dynamics appear to have influenced portfolio diversification trends among institutional investors.

Although speculative positioning remains high, structural demand has so far been a key influence on gold prices in 2025, though this remains subject to change as market conditions evolve.

11. Historical observation ranges (informational only)

These scenarios are hypothetical and based on past patterns. They do not represent forecasts, guidance, or investment advice.

12. Summary

Gold’s record levels amid elevated real yields suggest a redefined role for the metal in global portfolios—less as a short-term hedge, and more as a structural reserve asset. In 2025, the tug of war between valuation and conviction continues, with both sides pulling equally hard.

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Disclaimer: This publication is intended for informational purposes only. All data are sourced from publicly available materials including the World Gold Council, CFTC, Reuters, Forbes, and Certuity (October 2025). Figures represent historical observations and should not be interpreted as financial advice, recommendations, or forecasts. Past performance is not indicative of future results. All information is believed to be accurate at the time of publication but is subject to revision without notice. This Totality Deep Dive was produced by Totality Market Strategist Aaron Zanchetta.