Gold intermarket: will the dollar topple and send gold higher?
Gold has been consolidating the bull 2016 rally these last few weeks, but supply is weighing in as bull's step aside waiting for the next catalyst that could come from the Fed continuing to hold off as the dollar begins to peak again.
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The DXY has been on a downward spiral since the highs of above 97.30 and subsequent sell-off as the markets start to question the Fed's credibility in respect to their misguidedness and calculation for timings of a rate hike this year, let alone to their 4% longer term target for interest rates while they can barely get them off the floor without serving up a disaster for the US and global recovery.
However, the DXY managed to stabilize last week on some hawkish rhetoric from Fed's Dudley and Williams and the gold price dropped as a result from $1,356 down to $1,332 while the VIX came off implying that the market had been less uncertain last week and prepared to take risks, also denting the precious metals performance on the bid. however, as we head towards the US GDP for the week and the Jackson Hole, news wires are full of reports dampening the outlook for the US dollar as attention turns back to the idea that the Fed may not be in a position to hike rates this year at all, let alone in September, evident in US yields and the 30 year would be one to watch to see if it starts coming off in a supply based market environment, bullish for gold as a risk-off asset class with investors looking for safe havens. currently, 30Y's are at 2.28, up from 2.25 17th Aug business.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
