gold, page-42817

That almost perfect negative correlation between USDX & gold started around December 2017. Last night's reaction to the very much expected rate rise is felt larger in gold than USDX on movement and not % wise.

Here is where logic of economic theory breaks down; The spread between the USD and major currency yields have either narrowed or in some cases gone negative for instance against AUD so technically it should favor USD rally from the IR rise. The reaction is the direct opposite. I suspect the market had already factored this symptom before that 'no brainer' news OR the forward 3 more rate rise this year isn't what the market was factoring which was punting on 4.

With the big movement of gold price reactionary rally, are we on the narrative of Gold=inflation hedge? I have no idea but maybe we can start a discussion here to explore this possibility?

The major stock market futures from Europe, Oz and Asia (Japan, HK, China) are in the green so it seems there is wholesale acceptance that more 'expensive' funds is indeed welcomed as opposed to the typical gold narrative that IR rise will crash the markets!!!

Interesting to note that tier 1 gold stocks have recently been in the upper end of their swing points or breakout territory. With the gold spike yesterday and I don't see much happening in the gold space generally speaking, it is signalling the gold punters locked and ready factoring this Fed's outcome in advance. Will these rallies in this sector be sustainable? I think so but I am bias. Will major stock market crash? Doubt it but I suspect there will be volatility again before the complete froth can be removed so the markets are able to power along.