Gold Hits Multi-Month High as Treasury Yield Dynamics Favor Non-Yielding Assets, Bitcoin Could Benefit

Gold (XAU) has surged to its strongest level since April, approaching its record high of $3,499, as a steepening U.S. Treasury yield curve adds momentum to precious metals. Analysts say this bond market shift could also create tailwinds for bitcoin (BTC).

Over the past ten days, gold has climbed more than 5%, reaching $3,480 per ounce, inching closer to the April 22 record, according to TradingView data. The rally coincides with the widening spread between short- and long-term Treasury yields: the 10-year minus 2-year (10y2y) gap has widened to 61 basis points, the largest since January 2022, while the 30-year minus 2-year spread hit 1.30%, the widest since November 2021.

This steepening is driven primarily by a sharper decline in the 2-year yield, which dropped 33 basis points to 3.62% in August, versus a smaller 14-basis-point fall in the 10-year yield, now at 4.23%. In bond market terms, this “bull steepening” occurs when short-term bond prices rise faster (yields fall) than long-term bonds, benefiting non-yielding assets like gold.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, explained that lower front-end yields reduce the opportunity cost of holding assets that do not generate interest. “This shift is particularly relevant for real asset managers, many of whom have struggled—or in some cases been restricted—from allocating to gold while U.S. funding costs were elevated,” Hansen said.

Gold-backed ETF holdings declined by 800 tons between 2022 and 2024 as the Fed raised rates to combat inflation, pushing short-term yields higher. The current yield dynamics are thus seen as supportive for gold accumulation.

Bitcoin, often dubbed “digital gold,” could similarly benefit. Like gold, BTC is a non-yielding asset whose value depends on scarcity, market demand, and perception. The decline in short-term yields lowers the relative opportunity cost of holding bitcoin, making it more attractive amid macro uncertainty.

Longer-duration yields remain relatively stable, reflecting persistent inflation expectations and other factors that further support the bullish case for gold and bitcoin. Analysts at ING noted, “The U.S. Treasury curve has steepened: lower rates today risk inflaming inflation ahead, which is negative for bonds but positive for non-yielding stores of value.”

Hansen added that the 10-year yield’s resilience is partly driven by inflation breakevens, currently around 2.45%, with the remainder representing the real yield. “Investors are demanding greater compensation for fiscal risks and potential political interference with monetary policy. This environment typically supports gold as both an inflation hedge and a safeguard against policy credibility concerns,” he said.

Historically, periods of bull steepening in the yield curve have favored gold and gold miners, while equities often underperform. Bitcoin occupies a unique space: it can behave like a tech asset, moving with the Nasdaq, yet retains gold-like characteristics, making it potentially resilient in the current macro setup.