Gold Needs to Reverse Soon if It is Going Higher

If gold breaks below 1445, stocks may move higher because of the inverse correlation.

Gold and the stock market are considered traditionally to be inversely related. When prices of stocks go down, the price of gold moves higher, and vice versa.  That is indeed the case today as we can see on the correlation coefficient oscillator at the bottom of the chart on a daily timeframe.  The correlation coefficient is currently -.68.  (For reference, a correlation coefficient of -1.00 means that the two assets move in opposite directions 100% of the time.).  As stocks continue to put in new all-time highs, gold has been pulling back.

Source: Tradingview, City Index

The price of gold in the spot market is near 1455.  On September 3rd, it traded as high as 1555.76 before pulling back in a flag like formation.  Price is near strong support at 1445. This level represents horizontal support, trendline support from the bottom of the flag, and it is the 38.2% Fibonacci retracement level from the lows in late April to the highs on September 3rd.  If price closes below 1445 on a daily timeframe, it may be likely to travel down towards 1410.75, which is the 50% retracement level of the previously mentioned timeframe.  If gold does break below 1445, stocks are likely to move higher because of the inverse correlation. 

If the price of gold holds the 1445 level and begins moving higher, it could trade out of the flag formation.  The target for the flag is near 1715.  However, on the way to the target price, must first break through the top of the flag near 1490. The next resistance level is  the highs of September 3rd at 1555, which is also near horizontal resistance from 2011-2013.  If the target is achieved, the next level is near 1797, which is a triple top and old support, also from 2011-2013.

Source: Tradingview, City Index

However, just remember that if gold trades up to those levels, stocks theoretically will be much lower.


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.