BRIEF UPDATE for Gold Investors: Mar 9, 2023

An interesting development after-hour today. The Treasury bond market yields are falling (or price rising) across the board. On the long-end, currently the 10yr Note price is up 0.8% while the 30yr is up 1.27%. It is light volume trading after-hours but the move looks serious.

For the past few updates we have been highlighting the topping formation in the 10yr yield and Figure 2 shows what it looked like at the close today; basically still remained in a tight trading range between 3.9% to 4.0%. But now in after-hours trading, it looks like the 10yr yield has broken down and is now trading roughly around 3.8% or slightly below.

Figure 2

Fundamentally, this is bullish for the gold price although its yet to react at the time of this writing. If the breakdown persists into normal trading hours, perhaps it will be taken more seriously. So tomorrow is going to be very interesting. We may see upside in gold sooner than we though and perhaps even without a lower-low.

Turning to the normal trading hours gold market, price bounced up nicely today into the $1,830s but it did not elicit any enthusiasm from the perspective of the options market. The put:call volume ratio continues to show the same, little additional interest in adding upside exposure via call options as shown in Figure 3.

Figure 3

Gold futures volume remains elevated with 304k contracts trading today which is 44% above its 50d EMA. Such high volumes are consistent with the formation of a low. This has caused the 5d EMA volume spike to continue to grow as shown in Figure 4.

Figure 4

Tomorrow morning is the employment data release which is the first catalyst event in the coming days. I am not sure if it can reverse the breakdown in yields but lets see.