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Gold Takes Shine Off Bonds

Normally an afterthought for U.S. government bond investors, gold prices are suddenly back on the radar amid growing worry the yellow metal's surge to 25-year highs portends more blood-letting for Treasuries...


While a continued rally in precious metals could reinforce that tendency, some analysts caution against reading too much about the inflation outlook from this newfound luster in gold and silver.

"The problem with the logic of using the price of gold as a leading indicator of inflation is that it is subject to a variety of influences that have at best a tenuous relationship with U.S. inflation," warns Lakshman Achuthan, Managing Director at the Economic Cycle Research Institute, an independent research group.

"This includes the policies of the world's central banks with regard to the sales of their gold holdings, the hedging policies of gold producers, and the demand for gold jewelry around the world."