Gold futures have embarked on a robust rally, propelling the precious metal to break all-time highs. This surge in gold prices has been influenced by a series of impactful events throughout the year. Initially, financial crisis fears emerged with the collapse of Silicon Valley Bank in March, creating uncertainty in the markets.
Gold’s Correlation to Yields
Geopolitical tensions in the Middle East, particularly between Israel and Hamas, added another layer of complexity, yet gold exhibited a notable disconnect from interest rate yields during this period. However, recent Consumer Price Index (CPI) and Producer Price Index (PPI) numbers for October, showing no increase in inflation, have realigned the correlation between metals and interest rate yields.
Major Headwinds for Gold:
As the year approaches its conclusion, economic indicators are coming into focus. On December 1st, the Atlanta Fed revised its GDP Now for Q4 lower from 1.8% to 1.2%, signaling potential headwinds for economic growth. The bond market is actively repricing interest rate expectations for 2024, with a significant event on the horizon—the release of the Fed’s summary of Economic Projections on December 13th, featuring the influential Dot Plot.
Amid these uncertainties, gold is rallying due to concerns about weaker economic growth, a slowing consumer, and the prospect of easier financial conditions, creating a "Risk On" environment for various assets. For gold to confirm a breakout, it will need to decisively break and close above the psychologically significant level of 2100. As mega-cap tech stocks have dominated headlines throughout the course of this year, is it Time for Gold to Shine?
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Gold’s Correlation to Yields
Geopolitical tensions in the Middle East, particularly between Israel and Hamas, added another layer of complexity, yet gold exhibited a notable disconnect from interest rate yields during this period. However, recent Consumer Price Index (CPI) and Producer Price Index (PPI) numbers for October, showing no increase in inflation, have realigned the correlation between metals and interest rate yields.
Major Headwinds for Gold:
As the year approaches its conclusion, economic indicators are coming into focus. On December 1st, the Atlanta Fed revised its GDP Now for Q4 lower from 1.8% to 1.2%, signaling potential headwinds for economic growth. The bond market is actively repricing interest rate expectations for 2024, with a significant event on the horizon—the release of the Fed’s summary of Economic Projections on December 13th, featuring the influential Dot Plot.
Amid these uncertainties, gold is rallying due to concerns about weaker economic growth, a slowing consumer, and the prospect of easier financial conditions, creating a "Risk On" environment for various assets. For gold to confirm a breakout, it will need to decisively break and close above the psychologically significant level of 2100. As mega-cap tech stocks have dominated headlines throughout the course of this year, is it Time for Gold to Shine?
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
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