Precious metals prices have largely moved sideways since the Federal Reserve's March rate-setting meeting that by all accounts should have been the spark that lit a fire under the market - particularly for gold. Broad dollar weakness over the last two months would usually have translated into support for gold. The crucial variable holding this relationship back is a change in inflation expectations, which have risen more slowly than US Treasury bond yields. This has caused real yields to push higher. "In general, higher yields (especially real yields) are net negative for gold and other precious metals because they belong to the group of investments that yield zero or almost nothing," analysts at ABN Amro wrote in a note to clients, adding that they expect real yields to rise further still. Gold will struggle in that environment.
