XAUUSD IS Benefitting from The Decline in Yield
Past performance is not an indicator of future results
Source: www.tradingview.com
The weekly chart above shows gold (XAUUSD) from the beginning of 2019. The indicator below is the correlation coefficient between the precious metal and the US10Y. For most of this period the correlation has been negative (green rectangle). A reason for this is that bonds and gold are both considered safe-havens. During this period the yield on the US10Y dropped below 3% and continued to decline. This effectively erased a fair amount of the opportunity cost of holding gold instead of bonds. As such, gold became a more attractive option as a safe-haven as one is foregoing less interest income. Consider this relationship from Wednesday, following the Fed announcement:
Past performance is not an indicator of future results
Source: www.tradingview.com
To make the point we reference the XAUUSD 4 hour chart and its correlation to the US10Y. As yields declined after the Fed announcement on Wednesday (blue vertical) and following today's NFP release, gold has appreciated in value. The current correlation is around -0.7 which reflects a very strong inverse relationship during this time.
Given this reaction, it is likely prudent for gold traders to keep an eye on interest rates in the coming weeks.
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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