Financial encyclopedia

The market has recently renewed its focus on an important concept: the real interest rate.  
Real interest rate = Nominal interest rate − Inflation rate 

On the surface, U.S. interest rates remain relatively high, but when inflation is factored out, short-term real interest rates are actually close to zero. This means that while holding short-term dollar assets still yields nominal returns, after accounting for rising prices, the actual purchasing power may not increase significantly. However, looking at 10-year TIPS, long-term real interest rates still stand at around 2% or higher. Therefore, more accurately speaking, the current situation in the U.S. is one of near-zero short-term real interest rates, while long-term real rates remain positive. 

This shift will remind the market of the era of negative real interest rates:  
Historically, whenever real interest rates remain low for extended periods or even turn negative, several market changes typically occur.  
First, the appeal of holding cash diminishes.  
When interest rates fall below inflation, even though cash and bonds may appear to offer returns, their actual value fails to keep pace with rising prices. 

Second, capital will chase assets.  
Stocks, real estate, commodities, and gold may all benefit as capital seeks preservation of value and returns.  
A common phenomenon is that assets become more expensive. 

Third, the appeal of gold will rise.  
The market values gold as a store of value. 

What signals is the U.S. currently sending to the market?  
Currently, the U.S. is using short-term policy rates minus CPI, meaning the short-term real interest rate has already approached zero or even slightly turned negative. However, looking at 10-year TIPS, the long-term real interest rate remains above 2%, indicating that long-term dollar assets still offer a certain real return. The current situation is one of a tug-of-war: 

On one hand, inflation remains relatively high, suppressing short-term real returns and prompting investors to recall gold's role as a store of value. On the other hand, long-term real interest rates remain elevated, meaning U.S. Treasuries still offer positive real returns, putting pressure on gold due to its lack of income generation. This explains why gold sometimes appears to "fail to rise despite favorable fundamentals." The market is not focused solely on inflation or interest rates alone, but rather assessing whether the demand for inflation protection can outweigh the appeal of higher real yields. 

Investment Insight:  
Negative real interest rates can support gold, but they are not the only factor.  
Gold prices have never been determined by just one reason. 

It is simultaneously influenced by factors such as real interest rates, the dollar's movement, inflation expectations, geopolitical risks, central bank gold purchases, and capital flows. 

Don't base your direction on a single data point, but rather examine multiple factors to determine which force is driving the market.