| Leave it to the Federal Reserve to help break a 2000-year-old dynamic in the gold market. When Fed policy makers left US interest rates unchanged near zero per cent on Thursday they cited stubbornly low inflation, and bullion rose to a two-week high. Lower consumer prices have historically been a thorn for gold, which attracts buyers as a store of value.
But since the lack of inflation is allowing the central bank to wait longer before tightening monetary policy, that relationship is getting flipped. The evidence can be seen in the link between bullion and inflation expectations, measured by the 10-year Treasury break- even rate. The 120-day correlation has turned negative, signalling the assets are starting to move in opposite directions.......................................Full Article: Source
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