Gold has been selling off recently with copper and other commodities on the back of the rapidly strengthening US dollar and demand uncertainties (particularly from emerging markets).
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| US dollar against currency basket (DXY) |
But the tricky thing about gold is that it's just another commodity until it's not... We saw an example of that this morning as things started looking scary across financial markets. The 2-year German bond traded at negative yield for the first time as flight of capital accelerated (someone was willing to pay the German government to hold on to their euros for 2 years!).
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| Current 2-year bund yield (3 days, intraday) |
And as one would expect in such an environment, gold suddenly decoupled from copper. The sentiment quickly shifted from global demand uncertainty for commodities to urgent flight to safety. And gold became the beneficiary of this sentiment shift.
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| Gold futures vs. copper futures (3 days, intraday) |
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