Gold Inter-Market: Closely Follows US Equities and USD/JPY Price Behaviour
The bounce-back in the gold prices seen so far this week from just below $ 1200 threshold can be mainly attributed to the fall in the US equities amid increasing risk-off trades, as reflected by rising VIX.
Gold gets back in sync with VIX?
During the last NY session, the bullion went separate ways with the VIX and US 30-yr treasury yields, while took lead from a sharp fall witnessed in the US S&P 500 index and USD/JPY.
Despite the longer duration US treasury yields rising on increased June/ July Fed rate hike expectations, gold keeps extending its recovery mode as markets remain indifferent to higher returns on the US treasuries and sought safety in the bullion amid risk-off markets profile, as reflected by the recent retreat in USD/JPY from five-week highs. While the steady decline in the US stocks offer some support to the gold prices, with the bulls trying hard to take-out 5-DMA resistance.
Hence, for gold traders, apart from the usual reactions to the US economic releases, the performance on the US equities and the USD/JPY price-action remains a key, in order to gauge next direction in the precious metal.