The below line chart is one of my favorite that I created for cross-check US10 Y yield, Nasdaq and Gold . Normally, US10 Y yield goes the opposite with gold (negative correlation). It seems gold shrugged off the treasury yield today. Then, I checked the dollar index which face strong selling pressure after recent rally. The weakening dollar index support gold to go up by around $14. Of course, there’re other factors, such as inflation. The big rally of gold happened on last Wednesday was a good example.
Back to the US 10Y yield, I added notes on the . You can see that the recently movement is mainly driven by better-than-expected economic data. The pullback completion is an indication that the yield is going to retest previous high of 1.77%. But I guess the 45% degree uprising angle couldn’t sustained. It need to take a break(go sideways) in the next few days before attacking previous high. Overall, the normalization is inevitable. The yield will go back to pre-pandemic level of 2%.
So, if the yield keeps going up, I don’t recommend holding gold for too long(day trade and short swing trade is okie). This is in line with my previous gold analysis-the . You can refer details in the below linked idea.
Also, I’d prefer S&P to Nasdaq for investment as the tech-heavy index will be impacted more by the rising yield.
If the yield goes high enough, it’ll result in the strength of the dollar index . Remember what happened in early 1980s? However, I don’t think things will go crazy in that scale.
What do you think? Give me a like if you think the post is useful.
Business News Governmental News Finance News