RE:RE:What's Going Wrong With Gold Futures? Actually, Bond yields don't change when interest/market rates go up.
In fact, when interest rates go up, your bond yield doesn't change as its determined based on its coupon rate at the time of purchase.
For example, if you buy a 10 year $100,000 bond with a coupon rate of 5%, your annual bond yield is $5,000.
If the market rate increases to 8%, what happens to your bond yield? It remains the same at $5,000 per year. Since bonds use Simple Interest as opposed to Compound Interest, its yield remains the same, making it less attractive when inflation rates are high.
In addition, when market rates go up, the present value of that bond also goes down, meaning that it could be sold at a discount.
However, if the market rate is 3%, the bond yield per year is still $5,000, but the present value of that bond goes up, meaning it could be sold at a premium.
Because Bond Yields don't change, and you're not paid Compound Interest, Bonds and Treasuries are not an attractive investment compared to a safe haven like gold.