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Are 10-Year YIELD and Spot GOLD Hearing the Same Drummer?


Below is what we discussed yesterday, with the blue arrows showing where 10-Year YIELD and GOLD were trading yesterday morning at around 8:20 AM ET.

Today we had stronger than expected Q2 GDP data, and Q2 Corp Profits, yet 10-year YIELD remains under pressure, falling to 2.32% from 2.36% yesterday morning, and continuing to decline from its Aug 21 lower rally high at 2.45% towards a test of the Aug 15 low at 2.30% in an effort to preserve its Aug downtrend.

Meanwhile, Spot GOLD has popped to a new recovery-rally high this morning, extending its post-Aug 21 series of higher-highs and higher-lows.

It is very perplexing that YIELD cannot catch a bid amidst a supposedly compelling economic recovery.

Fear rules... money is flowing into safety  into both Treasuries and GOLD.  MJP 8/28/14

During the past week, or so, we can make the preliminary argument that the August downtrends-- the series of lower-lows and lower-highs--in my hourly 10-year YIELD and spot GOLD patterns have diverged.

That is, spot GOLD appears to have neutralized its downtrend, while YIELD remains constrained within its still bearish August stair-step decline.

Although we should think that recently improved eco data would trigger a bit of upward pressure on YIELD, nothing of the sort seems to be happening.

We can only wonder if 10-year YIELD is heading for yet another new low beneath the Aug 15 low at 2.30%?

Perhaps it is, but the GOLD market is not so enamored with such a prospect, because inflation is percolating beneath the surface, or a geopolitical flight-to-safety is unfolding that is slowly sending capital into GOLD?  MJP 8/27/14

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