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Battle of the safe havens - Gold vs the U.S. 2 year yields

Kitco Media
By Rajan Dhall
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(Kitco News) - The move lower in gold has perplexed many at a time when inflation is very high. Wednesday's U.S. inflation figure was just another reminder that the cost of living is spiraling. Traditionally the yellow metal was used as a hedge for inflation but at the moment the gold price is falling.

The chart below is gold vs the U.S. 2-year yield. The comparison chart is moving towards a significant low. Not only is the chart in a serious downtrend the constant lower highs and lower lows show no signs of stopping.

Historically speaking when gold was used as an inflation hedge there was no QE unwind or rate normalization. That means the differential is in unchartered territory.

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Rajan Dhall

Rajan Dhall is a financial analyst that has been in the trading industry since 2009. From working in Canary Wharf (London) as a head trader to becoming a journalist on a real-time news desk, Rajan has worked his way through many positions in the financial sector. The main area of Raj's expertise lies in technical and statistical analysis. Rajan currently lectures technical analysis with the Society of Technical Analysts (STA) at the London School of Economics. One of the main areas Rajan has based his analysis on is probability. Raj completed his certification (probability) with Harvard and regularly uses probability theories in his analysis as he feels it helps him add value to his clients and customers.

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