Watch 10-Year TIPS Yield Before Buying OUNZ Gold ETF Right Now

VanEck Merk Gold ETF (NYSEARCA:OUNZ) has delivered exceptional returns over the past year, nearly doubling in value as gold prices climbed. This performance mirrors SPDR Gold Shares (NYSEARCA:GLD | GLD Price Prediction) because both funds provide direct exposure to physical gold prices, creating a tight correlation between the ETFs and the underlying commodity.

For investors holding OUNZ or considering it now, the question isn’t whether this ETF is well-constructed. It is. The question is what happens next to gold, and that depends on two distinct forces: one macro, one specific to how this fund operates.

The Real Yield Question

The biggest macro factor affecting OUNZ is the direction of real interest rates, which measure nominal Treasury yields minus expected inflation. When real yields fall, gold becomes more attractive because it doesn’t pay interest. When they rise, gold loses appeal relative to bonds.

The macro environment for gold currently faces a tug-of-war. Energy costs have declined significantly, which typically dampens inflation expectations and makes bonds more attractive relative to non-yielding assets like gold. However, if economic weakness forces the Federal Reserve to cut rates aggressively, that could offset the inflation decline and keep real yields low enough to support gold prices.

Investors should watch the 10-year Treasury Inflation-Protected Securities yield, published daily by the U.S. Treasury. A move above 2% would signal tightening financial conditions that could stall gold’s rally. A drop toward 1% or lower would suggest the opposite. This metric updates every trading day and directly influences how institutional investors allocate to non-yielding assets like gold.

Allocated Gold and Liquidity

OUNZ’s physically allocated structure creates both an advantage and a constraint. Investors gain the ability to redeem shares for actual bullion, which appeals to those seeking tangible gold exposure. However, this means VanEck must maintain full backing in secure vaults, which can affect liquidity dynamics as the fund grows or contracts.

The micro factor to watch is the fund’s ability to maintain tight bid-ask spreads and consistent liquidity as assets grow or shrink. Unlike GLD, which trades over 21 million shares daily, OUNZ has lower volume. If gold prices spike or crash quickly, wider spreads could create tracking inefficiencies. Check VanEck’s monthly fact sheets for updates on assets under management and average spreads to confirm the fund is operating smoothly.

The next 12 months hinge on whether real yields stay low enough to justify holding a non-income asset, and whether OUNZ maintains the liquidity infrastructure to track gold’s moves without friction.