GOLD vs. USBond

17 июн.

"Neutral" interest rates according to the Federal Reserve Bank of New York, was killed at 0.7% in the first quarter of 2024. This indicator shows us that the rate level should support a booming economy that will sustain the rate cut target towards 2%. While the Fed's long-term forecast for the federal funds rate has risen to 2.8%. Wells Fargo has brought out the list of emerging countries with a complicated outlook including: China, Colombia, Chile and Mexico. This only worsens the credit rating of their bonds in the coming quarters and despite China's apparent growth, this appears to be insufficient. The withdrawal of 3% of total existing bonds, some $54 billion in Chinese government bonds to cover its internal problems, has covered only $1.8 billion in gold and the rest in debt.

In the meantime, those who have covered the gap generated by China have been mainly Japan and Luxembourg. The EURONEXT adjustments with China have withdrawn a large part of the collaterals located in the Asian country to the European region, hence this transfer of funds. As a result, the strength of the U.S. bond is maintained. In relation to these countries on the WellsFargo list, India has been spared from such cataloguing due to its reduced fiscal deficit and its stability in the Debt-GDP ratio.

All this bond mismatch and the BRICS shift to gold as a pre-Nixon style support currency in which Bretton Woods was eliminated, has been this weekend ended the Petrodollar support with Saudi Arabia, saying no I don't want to, to the US. So we will again see moves in the direction of revaluation in both GOLD and OIL.


If we look at the technical aspect of Gold, there has been a price correction since June 7 that degraded the price value by -4.46%, since June 10 it has recovered about half of that fall. Looking at the shape of the bell, it currently weighs heavily at the $2343 price while the low is at $2277.06. It will be simple to see a move to regain that price zone, what needs to be seen is how long it holds if U.S. bonds appreciate and bonds like China's depreciate. Finally there has been a large increase in bond buying by large funds which may solidify a possible corrective downtrend in gold. If we look at the RSI at this time is oversold at 45% so as we say that would cement that signal price recovery in the short term.

Ion Jauregui - ActivTrades Analyst



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