🚨 GOLD JUST GOT HIT HARD
Gold has fallen from around $4,283 to $4,110 this morning — a massive move of roughly 4%.
So what is driving the sell-off?
One of the biggest factors is U.S. Treasury yields.
The U.S. 2-year yield is now approaching 5%. And this creates a serious problem for gold.
Gold pays no yield.
But an investor can potentially earn close to 5% from short-term U.S. government debt.
For large institutional investors, that changes the opportunity cost of holding gold.
And then we have oil prices rising, renewed inflation concerns and increasing expectations that the Federal Reserve could keep rates higher.
The situation with Iran isn't helping either. Trump rejected Iran's latest proposal, adding another layer of uncertainty to an already tense market.
Many investors are still expecting gold to make another all-time high this year.
But here's the problem:
Gold cannot ignore the bond market.
If yields continue climbing aggressively, gold could remain under significant downward pressure.
Technically, one major level I am watching is the 200-week EMA, around the region of last year's major breakout.
That doesn't mean gold must fall there.
But after such an extraordinary rally, today's move could be the beginning of a much deeper correction rather than simply another dip to buy.
Watch the yields. Watch the dollar. Watch oil.
They may tell us where gold goes next. 📉
Gold has fallen from around $4,283 to $4,110 this morning — a massive move of roughly 4%.
So what is driving the sell-off?
One of the biggest factors is U.S. Treasury yields.
The U.S. 2-year yield is now approaching 5%. And this creates a serious problem for gold.
Gold pays no yield.
But an investor can potentially earn close to 5% from short-term U.S. government debt.
For large institutional investors, that changes the opportunity cost of holding gold.
And then we have oil prices rising, renewed inflation concerns and increasing expectations that the Federal Reserve could keep rates higher.
The situation with Iran isn't helping either. Trump rejected Iran's latest proposal, adding another layer of uncertainty to an already tense market.
Many investors are still expecting gold to make another all-time high this year.
But here's the problem:
Gold cannot ignore the bond market.
If yields continue climbing aggressively, gold could remain under significant downward pressure.
Technically, one major level I am watching is the 200-week EMA, around the region of last year's major breakout.
That doesn't mean gold must fall there.
But after such an extraordinary rally, today's move could be the beginning of a much deeper correction rather than simply another dip to buy.
Watch the yields. Watch the dollar. Watch oil.
They may tell us where gold goes next. 📉