Gold clears first hurdle of resistance Gold clears first hurdle of resistance Gold clears first hurdle of resistance

Gold clears first hurdle of resistance

Commodities 7 minutes to read
Ole Hansen

Head of Commodity Strategy

Summary:  Gold has cleared key resistance alongside the rout in US stocks, and appears to be breaking its negative correlation to rising US real yields and the CNY.

Editor's note: The full-format WCU report will return next week.

Gold seems to be breaking its negative correlation to rising US real yields and the Chinese yuan. The yuan and gold have almost been joined by the hip of late, seeing weakness since the US-China trade war began. However the emerging softness in US stocks this week combined with the recent rise in bond yields and speculation that the dollar may be peaking have triggered renewed demand for diversification and tail-end protection. 

The close correlation between gold and the yuan has baffled the market in recent months. While no clear explanation exists, some speculation has emerged that the People's Bank of China is seeking a stable currency, not against the dollar but against gold. Indeed, XAUCNH (off-shore) and also onshore XAUCNY have traded in a very stable fashion during the recent period. Yesterday, however, the price broke the downtrend from 2016 and while the PBoC has undoubtedly been buying into the recent weakness, we are unlikely to see any selling emerge on renewed gold strength.

Source: Saxo Bank

Yesterday’s weaker-than-expected US CPI reading strengthened the market's belief that the Federal Reserve may be making a policy mistake if it doesn’t step away from its “nowhere near normal” stance on rates.  Together with a bounce in bonds as stocks continued lower, this narrative helped trigger the biggest one-day rally since June 2016, when the Brexit vote in the UK shocked the market.

Gold has now cleared the first hurdle of resistance at $1,210/oz but in order for this to be more than a weak correction within a major downtrend it needs at a minimum to break above $1,238/oz, the 38.2% retracement of this years sell-off.


The weekly COT report has highlighted the (up until recently) continued build in speculative short positions held by hedge funds. The peak was reached a couple of weeks back when the net-short hit a record 77,000 lots. This was three times bigger than the previous record short from December 2015, which occurred ahead of the first Fed rate hike. Given the impact of previous periods of short-covering, a return to a neutral position could see the gold price higher by between $50 and $75/oz.

The break above $1,210/oz this week has changed our short-term view from neutral to bullish. A continued focus on stock, bonds, and growth weakness and the potential of the dollar running out of steam could see the metal embark on a recovery towards $1,300/oz, our year-end target. Much still depends, however, on the overall market sentiment, which has been rattled by rising rates and falling stocks. A correction over the coming days following Thursdays strong gains need to be halted ahead of $1,210/oz in order for this improved technical outlook to take hold.

While the S&P 500 was down 5.4% Thursday and heading for its worst week since March, the VanEck Vectors Gold Miners ETF (GDX) was up 6.5%, its best week since January 2017. The exchange-traded fund tracks the performance of and invests in materials stocks of all cap sizes across the globe. Its largest allocation is in North America with Newmont Mining Corp. and Barrick Gold Corp. accounting for close to 20% of its exposure. 
Source: Saxo Bank

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 07

  • 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
  • The rise of populism: Far-right parties will influence the future

    The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.

    Read article
  • Investing in China: Navigating Q1 amid economic challenges

    Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.

    Read article

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research 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 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. To the extent that any content is construed as investment research, you must note and accept that the 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 under relevant laws.

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

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo 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 or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

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. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

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

The information or the products and services referred to on this site 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 are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

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