Gold pays no interest or dividend, so the cost of holding it is whatever return you're giving up by not holding a yielding asset instead. Real yields, the return on Treasuries after subtracting expected inflation, measure that opportunity cost directly, which is why they track gold's long-term value better than nominal yields or the dollar alone.
1. Why real, not nominal, yields matter
A high nominal yield sounds attractive, but if inflation is running higher still, the real (inflation-adjusted) return is negative, meaning bondholders are actually losing purchasing power. In that environment, gold's zero yield stops being a disadvantage since the "safe" alternative is losing value too.
2. TIPS as the tradeable proxy
10-year TIPS yields are the market's real-time market-based estimate of real yields, since they're explicitly indexed to inflation. When TIPS yields fall, especially into negative territory, it has historically coincided with some of gold's strongest multi-year advances, and rising TIPS yields have coincided with gold's weaker periods.
3. How to actually use this
This relationship moves over months and years, not days, so it's a positioning and bias tool rather than an entry trigger. A falling real-yield trend supports holding a longer-term bullish bias on gold pullbacks; a rising trend argues for more caution on dip-buying.