Gold And Yen Positioning Vs. Hedging
2022.04.01 10:47
At a time when correlations break down to the point of no return, the Gold–JPY correlation remains generally intact. Far from perfect, but sufficiently positive to the extent that if you had bought USD/JPY as well as XAU/USD, you’d have fared well—assuming you’re able to sustain intraday (and intraweek drawdowns). I explain below the relationship between gold and the yen, as well as evidence of tradable actions in gold/yen.
XAU/USD Daily Chart
The fundamental reason to the positive relationship between JPY and gold is their relative vulnerability to rising bond yields. I emphasize “”, because we saw earlier in the year how gold rose alongside rising real yields and yen. One reason to the breakdown in real yields-gold relationship is the breakouts in short-term breakevens covered in more detail here.
The above messages illustrate today’s trades , followed by the explanation of the relationship and a response to Group member in Hope you learn as well as you profit from it.
