Gold intermarket: gold sticks to the script, (risk-on, gold down)
|- Dollar makes fresh highs
- Dow correlation remains intact
- US 10 year yields through crucial 2.40%
Gold is sticking to the script, with a pick up in the Dow, (as earnings continue to come in largely ahead of expectations), Gold has dropped below key technical short-term levels while capped at a longer-term lagging indicator level. In respect to the negative correlation between the Dow and Gold on the 4hr sticks, the index and spot price's correlation jelled on the 7th of September with the bull trend steepening in the Dow and the start of the bear trend in gold. More recently, on the 18th Oct, once again, there is a very evident correlation.
Dow clocks fresh record highs on strong earnings
Eyes on US yields and DXY fresh highs, more downside to come?
Gold is consolidating currently between 1291 and 1272 within the bear trend. For today, the Dow is leading the risk sentiment again and Gold is moving lower towards yesterday's early low of 1272,58. Of course, the dollar remains a factor with bulls picking up the pace towards the psychological 94 level while eking out fresh highs at 93.95 on Tuesday as US 10 year yields make fresh highs through the psychological 2.40% mark at 2.4117%. Gold could extend the downside here should the US dollar remain better bid on US higher yields with 1275 a key support to keep an eye on.
US Dollar treading water around 94.00
Gold levels
Gold has dropped below the 21 SMA on the 4hr sticks, capped by the 100 SMA on the same time frames while the RSI (14) moves into oversold territory at 30. 1275 (100-D SMA) is the next key downside area for a daily close, although this looks fragile on the back of a resurgence in the greenback and next major support below 1273.60 comes at the 5th October lows of 1260.60. To the upside, 1280 and 1287, (21- D SMA meeting 10-D SMA), 1300/04 /08 areas remain key with daily closes above there for a look in at 1313.
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