Another Morning Spill, Followed By An Afternoon Plummet

And, another hole poked in the supposed positive correlation between gold and U.S. stocks. As I write this updated post, the three major averages are up about 1-1.1% each. Spot gold, after taking a spill from about $1,117 to $1104.20 in mid-morning, collapsed to about $1,090 just before 1 PM. The U.S. Dollar Index partially explains the drop [live chart here], but not all of it. The index was higher in the early morning, when gold was still above $1,110.


Historically and traditionally, gold was negatively correlated with U.S. stocks. As for today, there's rationale for negativity. Not only does a rise in stocks foreshadow a rise in U.S. interest rates, but also a rising stock market induces foreign demand for U.S. stocks and (indirectly) U.S. dollars with which to buy them. We may see the eclipse of the positive-correlation.