The 10-Year U.S. Treasury yield is pushing to a three-week high. When yields climb that fast, gold loses the argument. Investors have a paying alternative and they are taking it. The U.S. Dollar Index is strengthening on top of that, making gold more expensive for every buyer outside the United States. Two headwinds hitting simultaneously is not a setup gold can easily fight through.
Central Banks Adding Pressure
Three of nine Bank of Japan board members voted to hike Tuesday. On a central bank that has spent years resisting any move toward tighter policy, that is not a minor dissent. Inflation tied to the Middle East conflict is pushing even the most patient policymakers off the sideline. Tighter policy in Japan tightens conditions everywhere and gold is already paying for it.
The Fed holds this week and the market is not treating that as a green light for gold. Higher-for-longer is still the operating assumption and nothing on Tuesday changed it. The European Central Bank, Bank of England, and Bank of Canada all announce this week too. One hawkish surprise from any of them and this selloff has more room to run.
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