The recent uptrend of Gold starting from the beginning of March can be identified as a seek of safe haven by investors when FED was expected to announce its plans to stop raising interest rates due to the slowing down of the US economy.
As you might know, there could be a positive relationship between gold and bond prices, or a negative relationship between gold prices and bond yields. In other words, a “fear trade” can increase demand for both gold and bond.
By comparing the gold chart vs US 10-year treasury bond chart, we can clearly see that the recent uptrend of gold from 1281 is mostly due to the decrease in US 10-year bond yields. Therefore, any re-bounce in US 10-year bond yields can signal a decrease in gold prices. Or it can even tell a signal that recent uptrend in gold might halt, and gold could be due for a correction.
Assume that relationship is true, we will have to watch the US 10-year treasury yields for directions of gold prices during this week or next week. As long as 10-year bond yields keep going down, gold prices will keep moving up.
However when looking at the US 10-year bond yields chart above, we can tell the bond yield is quite close to an upward bounce. There is a possible bullish divergence of MACD indicator(moving average convergence / divergence). Plus the RSI (relative strength index) indicates that bond yield is at oversold condition. These two technical studies suggest that bond yield can bottom soon. Once bond yield bottoms and starts to move up (which means risk-on sentiment is back to the market), gold prices can get hurt and recent uptrend would be due for a correction.
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