What’s happening in the gold markets right now?

investmentnews.com:

What determines the price of gold? For much of the past decade the answer was easy: the price of money. The lower rates fell, the higher gold climbed, and vice versa.

Gold is the quintessential “anti-dollar” — a place to turn for those who distrust fiat currency — so it seemed natural that prices would rise in a world of low real interest rates and cheap dollars. Or when rates went up, gold, which pays no yield, naturally became less attractive, sending prices tumbling.

Well, not anymore.

As inflation-adjusted rates soared this year to the highest since the financial crisis, bullion has barely blinked. Real yields — measured by the 10-year Treasury inflation-protected securities, or TIPS, — jumped again on Thursday to the highest since 2009, while spot gold nudged down a mere 0.5% the same day. The last time real rates were this high, gold was about half the price.

The unraveling of the relationship between gold and real interest rates could be a paradigm shift for the precious metal, leaving investors struggling to calculate its “fair value” in a world where the old equations don’t seem to apply. It’s also raising questions about if and when the old dynamic might reassert itself – or whether it already has, just from a new base.

So what’s holding prices up?

Analysts point to a combination of voracious central bank buying – led by China – and investors that are still betting a US economic slowdown will be good for gold, even when the regular playbook says it’s time to sell.

“Our models told us it’s $200 too expensive,” said Marco Hochst, a portfolio manager at Berenberg. Yet the firm’s 319 million euro ($340 million) multi asset balanced fund which he helps manage is still holding about 7% of its assets in gold. “In our