The top shows the weekly 10-year real rate chart, with XAUUSD beneath it. The bottom indicator is the correlation coefficient (cc) between the two.
As the real rate appreciated, gold declined (green trendlines). This trend then morphed into a sideways pattern (blue-shaded area). The cc is currently reading a robust -79%, implying a meaningful inverse relationship between the two instruments.
In this regard, the real rate has a downward bias (down green arrow), with the price closing below the low of its reference candle (top red horizontal). On the other hand, the precious metal reflects similarly to the upside (up red arrow and red bottom flat).
The chart on the left shows the daily bullishness, with the precious metal trading above its reference candle's high (green horizontal). The chart on the right shows the hourly time frame. Here, the EMAs and the stochastic are both in bullish mode (black ellipses). The stochastic is above 80 (blue arrow). If it maintains this position, an underlying bullish momentum will be building.
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.