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Geopolitical Risk Diminishes for DXY and Gold, but Replaced with U.S. Economic Risk?


If we view the action of the U.S. Dollar Index (DXY) in the context of financial market risk-on, versus geopolitical risk risk-off, well, I guess the point of greatest tension with North Korea might be behind us, no?

Let's notice on the DXY chart that the price structure has rolled over in a significant way during the past week, either reflecting a predominance of concern about a faltering US economy or less concern about a nuclear standoff, or both.

An interesting aspect of DXY weakness is that it is buoying spot Gold prices despite the post-weekend depletion of geopolitical risk premium.

Gold has climbed about $50 during the past week, which coincided with the weakness in DXY.

Continued weakness in DXY now in reaction to weaker than expected US economic data, coupled with delay and disappointment about the Trump growth agenda, is keeping interest rates (on the long end) under pressure, also a supportive factor for spot Gold.

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