US Treasury yields break 5%, so why is money still flowing into gold? (Part 1) Guys, when it comes to gold, many people remember one rule: rising interest rates put pressure on gold. The logic isn’t complicated. Gold itself doesn’t pay interest, so the higher bond yields are, the more interest you forgo by holding gold. But if you only rely on this rule to judge the market, it’s easy to get confused: why is money still flowing into gold when interest rates aren’t low? Let’s first look at some already published data. According to the World Gold Council, in August 2026, global physically-backed gold ETFs saw a net inflow of about $18 billion, with holdings increasing by 121 tons to reach 4,189 tons—a record high. This shows that a significant amount of capital was willing to increase gold allocations that month. However, just because there was heavy buying in August doesn’t mean the same will happen in September, nor does it mean gold prices won’t fall. First, we need to distinguish between nominal yields and real yields—they’re not the same thing. The “10-year US Treasury yield breaking 5%” we see is the nominal yield. When analyzing gold’s opportunity cost, the market also looks at real yields, which are adjusted for inflation. A common reference is the 10-year TIPS (Treasury Inflation-Protected Securities) yield. Second, different buyers have different reasons for purchasing gold. Some compare gold’s returns to bonds, some want to diversify stock market risks, and central banks buy gold for reserve diversification. These demands don’t just disappear because Treasury yields rise a bit more. The World Gold Council’s research also points out that demand for risk hedging and central bank gold purchases can continue to support gold even when real yields are relatively high. So, the idea that “rising interest rates suppress gold” still holds true, but it’s not the only factor at play. When other demands are stronger, gold prices may not move solely based on interest rates. This ties into last night’s market action: when the dollar and yields strengthened, gold still pulled back. Short-term pressure and long-term allocation can absolutely coexist. For regular investors, I think the most important thing to avoid is jumping from “rate hikes mean you can’t buy gold” to “gold is now immune to rate hikes.” Gold has a role as a safe haven, but its price isn’t guaranteed. What’s truly worth studying is who’s buying, why they’re buying, and how long that demand can last.