Funds Are Turning Sour on Gold When You’d Least Expect It

Gold, according to financial markets lore, is a pretty simple beast.

For all its complexities, at bottom what it likes is a weak dollar, turmoil, and lower interest rates. Falls in the greenback mathematically raise the price of dollar-denominated commodities. Turmoil makes investors head for safe-haven assets, of which gold is by far the most long-standing. Lower rates reduce the appeal of its main competitor as a haven, yield-producing government debt.

That makes the activity of money managers of late rather mystifying. Animal spirits appear to be returning to financial markets, paring back interest rates and dollar strength, while US House Speaker Nancy Pelosi’s visit to Taiwan is threatening to spark the biggest geopolitical crisis since Russia’s invasion of Ukraine. Gold itself has risen 3.9% over the past three weeks, its best run since the eve of Moscow’s war in February — behaving much as you’d expect.