Intriguing developments are underway in the gold market, sparking discussions about the potential acceleration of global de-dollarization. A striking divergence has emerged between gold prices and 10-year real rates, signaling a departure from their historically strong negative correlation.

Since 2021, this correlation has fractured, coinciding with gold reaching all-time highs. The pivotal question now looms: what factors are fueling this decoupling?

Two key forces seem to be at play:

US Fiscal Concerns: Mounting apprehensions surrounding the fiscal landscape in the United States have cast a shadow over the status of the US dollar as the global reserve currency.

Geopolitical Maneuvering: Countries such as China and other members of the BRIC alliance are actively diversifying their FX reserves away from US currency, opting for alternative holdings. This strategic bid underscores a broader geopolitical shift.

The resilience of gold prices amidst elevated real rates suggests that this trend may be in its nascent stages. Should real rates recede, the potential for gold to surge even further becomes increasingly plausible.