Gold is generally inversely correlated to the US 10-year real rate. There may be short periods when they sync up positively, but these are rare. The current correlation coefficient is -59%.
Last week the real rate charted a gravestone doji (blue arrow):
1. Hawks took the yield up to the high of last week.
2. They lost control to the doves.
3. The doves took yields lower.
4. The 10-year real closed the week at a lower yield
The reason for the pivot was the failure at SVB. This week has seen follow through by the doves, pushing the real yield further down, as market concerns grow around a crisis at Credit Suisse.
Given gold's inverse correlation, it is no surprise that the precious metal has benefitted. In effect, money has sought out havens, moving into bonds and gold.
Gold's weekly chart has charted a higher trough (HT) followed by a higher peak (HP). This week's worries have resulted in the precious meatal charting the next higher trough (HT*) in the series.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.