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Can't Sustain Gains Above 50-Day MA

GOLD

Gold is a little lower from Friday closing levels in NY. The precious metal last traded at $1773, off by a further 0.15%. After failing to close back above the 50-day MA on Friday (which comes in at $1787.40), the near term focus may shift to a more consolidative tone in gold.

  • This is also in line with renewed Fed hawkishness last week and the bumper Friday payrolls report. With US real yields are on the march higher again, which is likely to present a near term headwind to gold. The real 10yr is back to +37bps, from a recent low of +9bps at the start of the month.
  • The correlation between gold and US real yields remains a reasonable one. Note US nominal yields are down a touch today, with both the 2yr and 10yr down by 1.5 to 2bps. This hasn’t aided gold sentiment though.
  • Other cross asset drivers haven’t had a huge influence on trends today either. Equities are mixed in Asia Pac markets, but generally away from worse levels. The same goes for US equity futures. The USD has tried to rally against the majors today, but hasn't made much in the way of fresh inroads.
  • Elsewhere, the Czech central bank stated over the weekend it wants to increase the shares of its FX reserves that are held in gold. Note total FX reserves for the central bank are $157bn.
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Gold is a little lower from Friday closing levels in NY. The precious metal last traded at $1773, off by a further 0.15%. After failing to close back above the 50-day MA on Friday (which comes in at $1787.40), the near term focus may shift to a more consolidative tone in gold.

  • This is also in line with renewed Fed hawkishness last week and the bumper Friday payrolls report. With US real yields are on the march higher again, which is likely to present a near term headwind to gold. The real 10yr is back to +37bps, from a recent low of +9bps at the start of the month.
  • The correlation between gold and US real yields remains a reasonable one. Note US nominal yields are down a touch today, with both the 2yr and 10yr down by 1.5 to 2bps. This hasn’t aided gold sentiment though.
  • Other cross asset drivers haven’t had a huge influence on trends today either. Equities are mixed in Asia Pac markets, but generally away from worse levels. The same goes for US equity futures. The USD has tried to rally against the majors today, but hasn't made much in the way of fresh inroads.
  • Elsewhere, the Czech central bank stated over the weekend it wants to increase the shares of its FX reserves that are held in gold. Note total FX reserves for the central bank are $157bn.