Don't Ignore This Chart!

Gold Hit by Dollar and Rising Yields

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The PerfChart below tells the story for the Dollar, Treasury bonds and commodities since late September. Note that stocks, the Dollar Index ($USD) and the 10-YR Treasury Yield ($TNX) are down, while the 10-yr Note ($UST), Spot Gold ($GOLD), Spot Crude ($WTIC) and Spot Copper ($COPPER) are down. It is a classic relationship at work: commodities suffer when the Dollar rises. Normally, bonds tend to rise when commodities decline because this is disinflationary. However, it looks like the bond market is making an adjustment to Fed policy, or rather perceived Fed policy because nobody really knows what the Fed will do in December. 


 

 

For traders, this PerfChart highlights some underlying themes to keep in mind. First, the Dollar is rising and strong. Second, commodities are falling and weak. Third, bonds are also weak and falling. Fourth, stocks seem to like what is happening because the S&P 500 is up. Below is a screen shot from Intermarket Technical Analysis by John J. Murphy.  It is a nice page to print out because it lists the eight key intermarket relationships. Thanks, John! 

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Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
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Announcement from the Author

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Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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