By Ven Ram, Bloomberg Markets Live reporter and strategistGold’s high-convexity allure may be on full display over the next couple of months as the Federal Reserve takes its benchmark to at least 5.25%, pushing real rates higher in tow.Bullion proved to be one of the most resilient assets to own last year: it exited 2022 virtually unchanged even as the Fed raised rates by a phenomenal 425 basis points, sending real yields soaring as a consequence.That resilience showed that gold’s duration had crumbled from 17 in 2020 to just 3. That lower duration will stand it in good stead until the Fed gets to the finish line on rates for this cycle. (So far this year, the metal has held its nerve despite seeing a marked lack of interest from investors via bullion-backed exchange-traded funds)Longer term, gold has fundamental upside — underpinned by its high convexity — should the Fed pivot toward lower rates when the economy rolls over. Even so, it’s a bit premature to be positioned for the latter scenario since a recession may be unlikely before the second half of the year.Until then, gold is likely to stay tethered around $1,800 an ounce, inducing short-straddle expressions in the interim.Loading…