«The inverse relationship is sticky»
Sometimes the relationship between different asset classes varies greatly. Other times, it’s incredibly consistent. The link between gold and the U.S. dollar is one of the latter varieties. Picture gold on one side of a teeter-totter and the dollar on the other. When one rises, the other falls.
It’s a relationship that’s been on full display in recent months. The dollar peaked in September 2022. Right on cue, gold bottomed. But things have now shifted. Interest rates are rising once more, and so too is the dollar. The buck bottomed a few weeks ago, and gold topped.
The rising dollar is the culprit for the recent pain brought to bear on everything linked to precious metals.
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Chart of the Day: Nasdaq 100 (QQQ)
Note the strong negative correlation reading in the lower panel.
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