Thursday, June 20, 2013

So Why is Gold Down? Look To the Real Interest Rate

Update below.
Original post:

Near futures 1279.10 down $94.90.
When the Labor Department reported core CPI at 1.7% YoY on Tuesday the computers briefly saw that the inflation rate had stopped declining while the yield on the 10 year did not spike, bringing us closer to the negative rates that had prevailed until May. Gold was up Tuesday into Wednesday.
Here's the 10-year yield since Friday:
Chart forCBOE Interest Rate 10-Year T-No (^TNX)

Unless inflation jumps this month real rates on the 10-year have moved from .4% on Monday to .75% at one time today i.e. almost doubling.
That makes gold a lot less attractive than it was just six days ago.
Add in the strengthening of the dollar just today of .6% which shaved about eight bucks off the price as quoted in dollars and there was no way gold was doing anything but going down fast:

Why is Gold Crashing--Another View