Bouncing Dollar Hurts Gold, Rising Rates Boost Copper


The fact that U.S. rates are rising faster than elsewhere on the globe is boosting the dollar. A rising dollar usually hurts the price of gold. And it is. Chart 1 shows the upturn in the Dollar Index (UUP) near the start of September (when Treasury yields turned up) coinciding with a decline in gold (GLD). It also makes economic sense that a stronger global economy would favor stocks tied to industrial metals (like aluminum, copper, and steel) over gold. And that is certainly the case. The rising brown line in Chart 2 is a ratio of the copper miners ETF (COPX) divided by gold miners (GDX). The ratio recently hit a new high for the year (thanks to a three-year high in the price of copper). Notice how closely the copper/gold mining ratio has tracked the 10-Year Treasury yield (green line). The fact that both lines are rising together is a vote of confidence in the global economy.


John Murphy
About the author: is the Chief Technical Analyst at, a renowned author in the investment field and a former technical analyst for CNBC, and is considered the father of inter-market technical analysis. With over 40 years of market experience, he is the author of numerous popular works including “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Before joining StockCharts, John was the technical analyst for CNBC-TV for seven years on the popular show Tech Talk, and has authored three best-selling books on the subject: Technical Analysis of the Financial Markets, Trading with Intermarket Analysis and The Visual Investor. Learn More
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