Short of a major decline in inflation expectations, the recent sell-off in gold should subside. Historically GLD uses 2 standard deviations from the 50day moving average as support after major sell offs (see second chart below).
Thursday, December 29, 2011
Gold - Comparing 5yr Inflation to Gold Prices
Two indicators I use to understand the price action of Gold are the 5yr inflation breakeven rates (the rate CPI would need to realize to justify 5yr TIPS prices) and the 5yr TIPS real yield. The chart is included below.
Short of a major decline in inflation expectations, the recent sell-off in gold should subside. Historically GLD uses 2 standard deviations from the 50day moving average as support after major sell offs (see second chart below).
Short of a major decline in inflation expectations, the recent sell-off in gold should subside. Historically GLD uses 2 standard deviations from the 50day moving average as support after major sell offs (see second chart below).
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