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Gold And Yen Positioning Vs. Hedging

Published 04/01/2022, 01:03 AM
Updated 07/09/2023, 06:31 AM

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 general fundamental reason to the positive relationship between JPY and gold is their relative vulnerability to rising bond yields. I emphasize “general”, because we saw earlier in the year how gold rose alongside rising real yields and declining 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 (far right box), followed by the explanation of the relationship (far left box) and a response to Group member in (center box). Hope you learn as well as you profit from it.

Latest comments

Touché sir! Have you been reading my diary?!
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