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Following electro-pop duo Goldfrapp's departure from EMI, a fourteen-track career-spanning retrospective of their hits to date was released. The compilation included two new tracks, this piece of dreamy synth-pop and the new wave ballad "Melancholy Sky."
The song's music video was shot on iPhone by Lisa Gunning in South America and chronicles the duo's travels on the road. Gunning is a film editor whose credits include Breaking and Entering and Nowhere Boy. She also directed Goldfrapp's 2010 single, "Believer." Alison Goldfrapp disclosed in a February 2010 interview with The Sunday Times that she was dating Gunning.
The song serves as a tribute to Alison Goldfrapp's late mum. She explained to Interview Magazine: "The lyric for 'Yellow Halo' came to me when I was thinking about my mother. She died two summers ago, when I was on the Head First tour. I see the 'Yellow Halo' as a happy and positive force."