- The run-up in Treasury yields has put pressure on gold prices and pushed investors out of gold ETFs. But as rates come off their highs, those ETFs have a chance to improve their technical situations.
- The 10-year Treasury yield is up today after easing back from Thursday's highs above 1.6% for three sessions. It's up 5 basis points to 1.47%.
- Gold (XAUUSD:CUR), off 0.7% this morning, is down 4.5% from last Tuesday as yields started a runaway move. It's down around 10% for the year.
- Higher yields make bonds more attractive compared with gold. In addition gold isn't getting the hedging advantage without the corresponding inflation inputs.
- Holdings in ETFs backed by gold have fallen each of the last 11 sessions, the longest streak since Trump's election in 2016, Bloomberg reports.
- The SPDR Gold Trust (NYSEARCA:GLD), off 0.4% premarket, the iShares Gold Trust (NYSEARCA:IAU), down 0.4%, the Invesco DB Gold Fund (NYSEARCA:DGL) and the Invesco DB Precious Metals ETF (NYSEARCA:DBP) are all bumping up against technically oversold levels (a relative strength index below 30).
- GLD's RSI is at 32.10, IAU is at 31.95, DGL is at 32.95 and DBP is faring best at 38.14.
- Each of the ETFs fell below their 50-day simple moving averages at the beginning of February.
- Adding some more pressure on momentum, the gold futures contract, on Feb. 17, marked its first death cross since June 2018, with the 50-day SMA crossing below the 200-day.
- "While it has been a rough week for commodity-related ETFs, outside of the gold and precious metal ETFs, it's been a great year with gains ranging from 6.5% for the DB Agriculture Fund (NYSEARCA:DBA) to 23.25% for the DB Oil Fund (NYSEARCA:DBO)," Bespoke Investment Group writes.
Sector Watch
- Chips will be watched today as AMD holds an event at 11 a.m. ET to introduce the newest addition to the Radeon RX family of high-performance graphic cards.
- The SOXX is up about 10% year to date.
- The Info Tech (NYSEARCA:XLK) sector dipped into negative territory last week for the first time this year as high-valuation stocks face pressure from rising real rates.