Global Macro: Gold Pushes Higher on Volatility
NEW YORK ( TheStreet) -- Volatility returns to the marketplace as we near the much anticipated September Federal Reserve meeting. Analysts believe that September will be the chosen start date to rein in the Fed's unprecedented monetary stimulus.
The charts below highlight how assets in the futures market have reacted to uncertainty of future monetary policy. By analyzing futures, we can look at a wide range of liquid assets to determine to where money is flowing and what the current expectations for financial markets are.
The first chart below is of the gold futures. Gold has been heavily sold, as investors have priced in lower inflation expectations and a stronger dollar. An ETF that closely tracks gold futures is the SPDR Gold Shares (GLD).
(TLT). As can be seen in the chart below, the 20-day exponential moving average, which gives greater weight to near-term price action compared to a simple moving average, is trending strongly downward. When the price of the long bond does cross above the moving average, it is only for a few days at most, then the price retreats. Until this trend can reverse, prices will continue to decline and rates will move to higher levels.
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