Gold held down by yuan, yields Gold held down by yuan, yields Gold held down by yuan, yields

Gold held down by yuan, yields

Commodities 7 minutes to read
Ole Hansen

Head of Commodity Strategy

Summary:  While semi-industrial and industrial metals continue to show signs of recovering, the same can not be said about gold with the yellow metal glued to a tight range around $1,200/oz.

While semi-industrial and industrial metals alike continue to show signs of recovering, the same can not be said about gold. During the past month, traders have increasingly been struggling to find the right direction and a tight range has emerged during this time with gold glued to the $1,200/oz level, having closed within $2/oz on more than half of those days. 

Industrial metals as seen through copper recovered strongly last week when China promised tax cuts and increased spending in response to the escalating trade war. Such an announcement from the worlds biggest consumer of metals was then backed up by news that Chile’s state owned Codelco, the world’s biggest producer, was seeing rising demand and limited supply. 

Following last week's strong recovery, HG Copper is now facing a band of resistance between $2.87 and $2.97/lb, the equivalent of $6,400 and $6,600/MT on LME Copper.

Source: Saxo Bank

The tailwind from industrial metals has allowed both silver and platinum to recover both in real terms and relatively against gold. The gold-silver ratio has fallen to a three-week low, and is now below 83 from a 10-year high above 85. Platinum, meanwhile, has outperformed gold by more than $50/oz since July 2 and is currently trading at $370/oz, a six-month low. 

Gold, silver, and platinum

With silver and platinum showing signs of life, the lack of movement in gold speaks volumes about its continued attachment to the Chinese yuan, and about the renewed rise in bond yields to a certain extent as well.

While the dollar has shown some gold-supportive signs of topping out over the past week, not least against the euro, the yuan remains weak. In fact, today saw the onshore yuan decline for a third session after the People's Bank of China set the daily fixing at 6.8571, the weakest level since August 24. This could indicate that the PBoC, instead of having drawn a line in the sand, is only managing the movements in order to avoid a sharp decline. 

In addition, the latest run up in US bond yields, both notional and real, ahead of today’s Federal Open Market Committee meeting has also weighed on sentiment. The rise back above 3% in 10-year notes and the lack of movement in inflation expectations (breakeven) allowed the 10-year real yield to reach a seven-year high at 0.95% earlier this week.

With the market putting the risk of a third 2018 rate hike close to 100%, the focus will instead be on the forward guidance from the FOMC with regard to future rate hike expectations. 

Gold and yields
The continued yuan weakness and pre-FOMC nerves has sent gold back below $1,200/oz today. The chart shows a price development that for several months now has caused no headaches for funds holding a record short position in COMEX gold futures. For that to change, gold needs to break back above $1,212 and potentially even $1,239/oz before a recovery can be put in motion.

Until such time, the yellow metal remains stuck with better opportunities potentially presenting themselves in the other metals.
Source: Saxo Bank

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.