Capital rotates into gold as havens sought
Source: www.tradingview.com
The last three trading sessions has seen the US 02-year decline from 5.076% to 4.055%. Today's trading is especially frenetic after weekended endeavours by regulators to stave off a bank run and prevent contagion from the SVB failure. Over the same period money has rotated into gold as a safe haven.
The daily correlation coefficient between the 02-year note and XAUUSD is a strong -77% i.e. a robust inverse relationship. According to Goldman Sachs, the SVB rescue means the Fed will not hike next week. "In light of recent stress in the banking system, we no longer expect the FOMC to deliver a rate hike at its March 22 meeting with considerable uncertainty about the path beyond March," said a team led by chief economist Jan Hatzius in a note to clients late Sunday (www.marketwatch.com).
This pullback in the 2-year may be implying as much. Fed fund futures have already indicated the chances of a 50bps have now dissipated. This may be a tailwind for the precious metal, as capital continues to move towards havens in this time of uncertainty.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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