Gold Intermarket – slide not yet done suggests 2-yr treasury yield
|That gold prices closely follow short-rate hike bets (two-year treasury yield) is a well known fact.
The metal came under pressure well ahead of Friday’s Yellen speech at Jackson Hole event, which forces one to think whether the hawkish stance has already been priced-in.
However, the comparative study of the price action in the two-year treasury yield and gold suggests further losses await the yellow metal. This is because; the two-year yield is trading well above post Brexit high of 0.787%, while the metal is still trading above pre-Brexit low of $1251 levels.
Furthermore, there is a talk that negative rates strategy adopted by major central banks has failed; hence there is little probability of a major stimulus in the short-term. Hence, the odds are high the metal would extend losses seen in the second half of this month.
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