Gold’s Rally Has a Big Catalyst — and It Could Help Bitcoin Too

Gold is staging a powerful comeback, rising to its highest levels since April and inching toward a fresh all-time high. While the precious metal has historically served as a safe haven during periods of market stress, the latest rally carries broader implications. A key driver in the bond market — the steepening of the U.S. Treasury yield curve — is not only fueling gold’s momentum but could also set the stage for renewed strength in Bitcoin.

Gold Nears Record Highs Amid Bond Market Shifts

Over the past ten days, gold (XAU) has surged more than 5% to $3,480 per ounce, just shy of its April record of $3,499, according to TradingView data. The rally coincides with a significant shift in the U.S. Treasury market: the spread between 10-year and 2-year yields has widened to 61 basis points, its highest since January 2022. Meanwhile, the 30-year versus 2-year gap expanded to 1.30%, the widest since November 2021.

This steepening of the curve is the result of a sharper decline in shorter-term yields. The 2-year yield fell 33 basis points to 3.62% in August, compared with a smaller 14-basis-point drop in the 10-year yield, now at 4.23%. In market terms, this is a “bull steepening” — a scenario that tends to benefit non-yielding assets such as gold.

Why Lower Short-Term Yields Matter for Gold

Ole Hansen, Head of Commodity Strategy at Saxo Bank, noted that declining short-term yields ease the opportunity cost of holding gold, which doesn’t generate income. “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 explained in a recent note.

Indeed, during the Federal Reserve’s aggressive tightening cycle between 2022 and 2024, bullion-backed ETFs shed more than 800 tons of holdings as higher short-term yields made gold less attractive. With funding costs now declining, that dynamic is beginning to reverse, creating fresh demand for the metal.

The Bitcoin Connection

Bitcoin, often dubbed “digital gold,” shares a similar investment profile: it is scarce, non-yielding, and largely driven by investor perception of value. Just as falling short-term yields reduce the cost of holding gold, they can improve sentiment toward Bitcoin.

BTC is currently trading near $109,100, down from its record highs earlier this year. But analysts argue that the same bond market forces lifting gold could also provide support for Bitcoin, especially as macro investors reassess portfolio allocations.

Both assets stand to benefit from skepticism about the Federal Reserve’s independence and lingering inflation risks. The resilience of longer-term yields reflects a market that still sees structural price pressures, which historically favors assets considered stores of value.

Investor Psychology and Market Dynamics

For gold and Bitcoin investors, the psychological component cannot be overstated. A rising gold price reinforces the narrative that non-yielding, scarce assets offer protection during periods of monetary uncertainty. Bitcoin often trades in sympathy with gold during such phases, as investors view both as hedges against currency debasement and geopolitical instability.

At the same time, Bitcoin’s higher volatility offers greater upside potential for risk-tolerant investors. This makes BTC attractive to a different demographic — one that sees digital scarcity as complementary rather than competitive with physical gold.

Looking Ahead

The steepening yield curve presents a unique catalyst for assets outside traditional income-bearing securities. With gold approaching record highs and Bitcoin consolidating near the $109,000 level, both markets appear poised to benefit from a broader shift in investor behavior.

If short-term yields continue to decline, the case for holding non-yielding, scarce assets could strengthen further. For investors, the interplay between bond markets, inflation expectations, and real asset performance may prove decisive in shaping the next leg of both gold’s and Bitcoin’s trajectories.