Apollo chief economist Torsten Slok has found a head-scratcher buried in the financial data: For years, the price of gold and real interest rates have been inversely correlated; as interest rates rise, the price of gold goes down. Now, however, the relationship between the two variables is completely scrambled with no discernable pattern, and Slok sees it as yet another sign investors are getting jittery about the state of the economy.
“It tells you that investors are anxious about the level of returns they get in traditional assets,” Slok told Fortune. “And that’s why investors are beginning to look at alternative assets.”
Citing data from Bloomberg and Macrobond, Slok notes that prior to early 2022 when the Fed began hiking rates to curb post-pandemic inflation that peaked around 9%, the price of gold and interest rates were inversely correlated. But after the Fed’s 2022 hikes, this was no longer the case. Instead of gold prices falling, which would follow the pattern of previous rate hikes, they instead remained resilient. As the Fed held rates steady, gold prices continued to climb.
According to Slok, this broken-down relationship signals to the market that in times of elevated interest rates, investors have additional considerations when pricing future outcomes—particularly for gold—in part a result of inflation remaining stubbornly elevated since early 2021.
“The bottom line is that new risks emerge when inflation is persistently above the Fed’s 2% target, which is where we continue to be today,” Slok said in his blog post.
Gold is a unique asset, wrote Goldman Sachs analysts Lina Thomas and Daan Struyven in an August 2025 Gold Market Primer report. It is hard to mine, and its supply grows only a little each year, with nearly all of the gold ever extracted from the earth still in supply, trading hands, as opposed to being produced or destroyed, giving it its precious value.
“Each year, more rock, more energy, more labor, and more capital are needed to produce the same ounce,” the analysts said. “This limited, slow-moving, price-inelastic supply is what has given gold its status as a store of value—what made gold … gold.”
In the past, gold’s inverse interaction with interest rates has resulted from the fact that the precious metal does not have yields and does not pay interest or dividends. When interest rates are high, gold becomes less appealing because of the increased opportunity costs of holding other assets like bonds. Conversely, demand for gold usually skyrockets when rates are cut, when holding assets that can produce cash flow are viewed as less advantageous.
While inflation has receded, hovering around 2.7%, Slok said he believes its persistent elevation has created a new normal of gold having more appeal, and traditional assets having less.
“I know this may sound like [3%, 2%] what’s the difference?” Slok said. “But this is really meaningful. If you allow inflation to be three for an extended period, then your portfolio will be eroded by 3% every year, instead of being eroded by 2% every year.”
“Elevated perceived macro policy risk in 2025 has not reversed,” Thomas and Struyven wrote in a note to clients last month. “The perception of these macro policy risks appears stickier. We thus assume that [gold-based] hedges of global macro policy risks remain stable as these perceived risks (e.g., fiscal sustainability) may not fully resolve in 2026.”
Slok isn’t so certain there will be a return to a predictability in gold prices that once neatly aligned with interest rates. He noted gold’s popularity will depend on how long investors see increased inflation (and geopolitical tensions) as a threat to their other assets—and if it’s poised to become the new normal.
“Maybe now we have a permanently higher inflation regime, and therefore maybe I need my permanent protection by buying real assets, of course, in particular gold,” Slok said of investors’ thought processes.
“Do investors feel that these four years since 2022 were an anomaly, or is it really a new regime that we have entered?” he said.
