Some food for thought this morning. In the last few weeks gold has notably diverged from 10-year real US Treasury rates:
In the past there have been divergences which have lasted a couple of days, however, the separation we have seen since the beginning of 2018 has been steady and consistent with no sign of reverting to the mean.
Another shifting correlation which helps to explain gold's divergence is the relationship between treasury yields and the US dollar:
There is usually a positive correlation between 10-year UST yields and the US Dollar Index. However, since December that relationship has become increasingly negatively correlated. At some point (perhaps above 3.00% on the 10-year note yield) rising yields should give support to the USD, but so far this has not materialized.
Another item worth noting is that the Daily Sentiment Index (DSI) for gold jumped up to 91 yesterday; historically, when the DSI has moved above 90 it has closely coincided with gold price peaks.
Are we at another peak for gold?
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