Over the past year, there’s been a very interesting relationship between the Gold (NYSEARCA:GLD), the U.S. Dollar (NYSEARCA:UUP), and Treasury Bonds (NASDAQ:TLT).
I’ve talked about this relationship (and chart below) many times in my newsletter. There has been a relentless push into the US Dollar (via UUP below) and out of Treasuries. And this of course has led to weakness in gold (GLD).
The greenback and treasury bonds are really stretched here, but we’ll need to see a turn in precious metals (i.e. gold prices) for a mean reversion trade to develop. Generally, headline moves like we’ve seen tend to unwind, that is mean revert, and sometimes very rapidly. Note that I wrote a technical piece on Treasury bonds last week.
This relationship is something to watch into and out of the Thanksgiving holiday.
Gold vs Treasury Bonds and US Dollar
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