Gold prices are set to jump, this pattern suggests

By Shawn Langlois
21-Sep (MarketWatch) — Erik Swarts of the Market Anthropology blog said last week’s move by the Fed to stand pat on rates should rejuvenate gold, and he used this chart to back his view. “While we had liked the position in either scenario because we felt the dollar and real yields already reflected lofty expectation to more contemporary tightening cycles,” he said, “the news cleared the way for gold to stretch its legs in a market environment that should broadly support the reversal.”

Looking ahead, he said he expects a weakening dollar to pull real yields lower, which will light a fire under gold. You can see the relationship between yields and the inverse price of gold in this chart overlay.

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