Gold went up. Journalists needed a reason. They found three.
Bond yields stayed high. The dollar weakened. Debt fears resurfaced. All three things supposedly made investors buy gold, which is impressive because investors have been ignoring two of those three things for months. But this week all three aligned like planets, and suddenly every retail trader with a Robinhood account thinks they cracked the commodity code.
Here's what actually happened: price hit support on the daily chart at $2,380, bounced exactly where it was supposed to bounce, and continued doing what it's been doing since April. The narrative came later. It always does. Some wire service intern googled "why gold up" and picked the first three macroeconomic events they could spell correctly.
The weaker dollar explanation is my favorite. Gold and the dollar have inverted maybe sixty percent of the time over the last eighteen months, which means the correlation is about as reliable as a coin flip, but we pretend it's an iron law of markets because it sounds smart at dinner parties.
Debt fears are even better. U.S. debt has been catastrophically high since before most traders were born. It goes up every year. It will go up next year. Calling it a catalyst for gold is like saying the sun caused your morning coffee. Technically both happened today, but one didn't cause the other.
Treasury yields are stubbornly high, which is a phrase that means "we expected them to drop and they didn't, so now we're annoyed at the bonds." Yields don't care about your feelings. They're just sitting there being yields. Gold doesn't care either. It bounced off support because that's what price does at support, and somewhere in Connecticut a man just bought three gold ETF shares because he read the word "jitters" and thought it meant something.
Check the chart next time. Save yourself the essay.
Photo by Dash Cryptocurrency on Unsplash
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