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Gold no longer an Intermarket Indicator

by Rafael Rosa on November 11, 2010

Gold Twit Gold no longer an Intermarket Indicator

NOTE: THIS POST WAS WRITTEN ON NOVEMBER 9th, so while the anecdote is two days old,  my opinion still stands.

Early in the morning, I was already calling it that Gold had become a worthless indicator. Overtaken by ETFs, fear, QE2, and the general public, the precious yellow (and silver) now do their own thing, with complete disregard to other markets.

Correlations are meant to be broken, and this Gold rush is a perfect example. With the Euro tanking, yields up, and the SPX on the red, Gold is still up 1.30% on the day and tracking higher. And lets’ not forget that the US Dollar Index is above the 77 level and looking for 78.

I typically use Gold as one of the confirmation signals when trading the Aussie or the Loonie (i.e. commodity currencies). However, I can no longer use this proxy to gauge the metals market. The only direction it knows is up.

As the pair crosses the $1,400, the algos will also jump in with force, followed by all the people in the sidelines waiting to see the round number come through.

It was good to know ya, Gold. Peace.


Technorati Tags: aussie, forex, fx gold analysis, gold, gold analysis, gold indicator, intermarket analysis, loonie

{ 1 comment… read it below or add one }

Arnaud NYMUS 11.12.10 at 7:34 am

Hi Rafael

Very, very interesting.

I must say I appreciate your comments and you calls.

Regards
Arnaud

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