-- Published: Thursday, 23 January 2020 | Print | Disqus
Jordan Roy-Byrne CMT, MFTA
The precious metals sector remains in a correction, and as long as the 200-day moving averages hold, a bullish consolidation that began last September.
Sure, Gold made a new high and is still holding around the previous high, but the rest of the sector has not confirmed that strength. When Gold is outperforming Silver and the gold stocks, it is not a bullish signal for the short-term.
With that in mind, we can look ahead to anticipate potential catalysts that could push the sector into breakout mode and to new highs.
Real interest rates must decline for Gold to rise. A bullish catalyst requires an acceleration in inflation or inflation expectations or lower interest rates.
From a macro-market perspective, keep an eye on the interplay between the US Dollar, the stock market, and the 10-year yield.
The correlations are neither perfect nor instant, but they have been and could continue to be constructive.
Over the past six years, we’ve generally witnessed that a rising US Dollar or US Dollar maintaining a high level can slow down the stock market and lead to lower bond yields. Take a look at the following chart.
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