Rising gold price and spiking global yields reflect investor fears about skyrocketing debt levels – Invesco's Hamilton

Investors are beginning to treat gold less as a tactical play and more as a strategic allocation as government debt levels continue to spiral higher, according to Christopher Hamilton, head of client solutions, Asia Pacific at Invesco. In an interview with CNBC on Thursday, Hamilton was asked what he thinks is behind the broad-based selloff in the global bond market. Hamilton pointed to two major factors that are pushing global yields higher. “One, at least from a U.S perspective, you see fairly resilient economic growth,” he said. “However, you also see concerns about inflation, and a re-emergence of the term premium we've seen off and on over the last 18 months, looking at some of the fiscal concerns coming out of the US. Hamilton said real yields are also rising quite substantially, and productivity increases are part of that. “I also think [there’s] this emerging term premium, and some of the fiscal concerns drive that too, because gold has also simultaneously increased, so that's driving a lot of the big theme, inflation, oil, I think all of this is pushing rates upward, as hard as maybe the Treasury's tried to push them down lately.” “That's really where I see rates going, and some of the confluent factors I see driving that.” Hamilton was then asked if gold’s price appreciation was being driven by a loss of investor confidence in central banks and governments as global debt continues to rise. “We consider gold definitely a fiscal and monetary shock absorber,” he replied. “I think there's also a much longer-term strategic play for gold in portfolios. We think about gold as almost like a walking proxy vote on faith in the monetary system, and we think with governments’ debt balances, and just the general fiscal situation, particularly from developed countries, that gold's going to become a more attractive asset class due to its store of value.” Hamilton said that investors have traditionally treated gold as more of a tactical play in their portfolios. “Now we're having a lot of conversations about using gold in a strategic asset allocation, permanently embedding it into your portfolio framework, due to these concerns.” “Now, it doesn't necessarily mean those can't abate at times,” he acknowledged. “They can, but I think the fears about those terms re-emerging are warranting that more strategic placement of gold in portfolios.” According to Invesco’s quarterly gold outlook from July , despite spiking energy prices boosting inflation and rate hike expectations, central bank demand will still help gold finish 2026 on a positive note. After gold posted its worst quarter since Q2 2013 when the price fell by 22.7, they cautioned that downside risks to the gold price remain. “The next few months could be pivotal for gold, as we watch to see how the Fed reacts to inflation – and whether inflation is sticky or comes down with lower oil prices – and if the US Dollar firms further versus other major currencies,” they said. “Higher interest rates and a stronger USD are generally negative for gold, as the former increases the opportunity cost of holding a non-yielding asset and the latter makes gold more expensive for international (non-US) investors.” But despite the rise in inflation expectations, the potential for rate hikes, and the yellow metal’s recent weakness, Invesco maintained a constructive outlook for gold in the second half of 2026. “[W]e believe much of the structural support for gold remains largely intact,” the authors said. “Central banks look set to continue buying gold to diversify their reserves. The World Gold Council (WGC) reported that a record 45% of central bankers responding to its latest survey said they expected to increase their gold reserves in the next 12 months, while 89% expect gold central bank reserves to increase globally over the coming year.”