Friday, January 30, 2015

Safe Haven buying supporting gold today


 

This has been the pattern since August of last year and with just a few exceptions, gold has been moving in sync with 10 year Treasury note futures.

Remember, a rising Treasury market means FALLING YIELDS.


As money rushes into bonds to park it while waiting out the uncertainty which is negatively impacting the equity markets, yields will move inversely. AS a matter of fact, the yield on the 10 year is currently sitting at 1.664%. It is set to close out the month not that far above the all time LOW yield near 1.50% ( remember this is a monthly closing yield and does not take into account intramonth spikes.

As long as this continues to be the case - falling yields resulting in safe haven trades - gold will find support - however, it is going to take some sort of catalyst to kick it sharply higher as there is still a very large contingent out there who view this period of falling rates as temporary while they wait for the stimulative impact of lower energy prices, ( and lower food prices) to make themselves felt in the second half of this year.