Gold & Yen Positioning vs Hedging

At a time when correlations break down to the point of no return, the Gold-JPY correlation remains generally intact. Far from perfect, but sufficiently positive to the extent that if you had bought USD/JPY as well as XAUUSD, you'd have fared well—assuming you're able to sustain intraday (and intraweek drawdowns). I explain below the relationship between gold and the yen, as well as evidence of tradable actions in gold/yen from our Whatsapp Broadcast Group.

The general fundamental reason to the positive relationship between JPY and gold is their relative vulnerability to rising bond yields. I emphasize “general”, because we saw this year how gold rose alongside rising real yields, but a declining yen. The reason to the breakdown in real yields-gold relationship is the breakouts in short-term breakevens covered in detail here.

 The below messages from our Whatsapp Broadcast Group illustrate today's trades (far right box), followed by the explanation of the relationship (far left box) and a response to Group member in (center box)