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Gold prices reach record high amid rising bonds, small-caps slump

Gold prices (GC=F) soared to a new all-time high during Monday's intraday trading session. This surge in the precious metal's value comes amid an unusual scenario where the 10-year Treasury note yield (^TNX) is also rising, however small-cap stocks (^RUT) are lagging behind the broader market.

Yahoo Finance's Jared Blikre breaks down the details, discussing how the ISM's manufacturing PMI print has impacted markets.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

Editor's note: This article was written by Angel Smith

Video transcript

JOSH LIPTON: Brought to markets under pressure here. But gold hitting a new all time high in today's trade. Jared Blikre joins us for more. Jared.

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JARED BLIKRE: Josh, I'm looking at a high of $2,286, or $2286.40. That is a record high denominated in US dollars. And you can see trading around 22 to 60 right now.

And I'll show you a chart. Now, we started the day pretty high. And you can see we actually headed lower on that stronger than expected.

ISM report this morning. And this has important implications. And let me just kind of tie together all the market moves that I'm seeing right now.

So we have gold at a record high. And usually, you don't see that when you have the 10-year T note yield climbing. But as I said, the gold move had already been made to the upside. And it was climbing down.

Now, here's the 10-year T note yield. This is up 12 basis points today. This is the largest jump that we've had in about six weeks. So this is significant.

In addition, we are knocking on a multi-month high. Here's a one-year chart. And you can see we are right by the highest level going back to late last year.

And if we were to accelerate beyond that, that would probably mean traders are looking for that higher for longer trade that the Fed will actually not cut by as much as was thought. Now, here's another correlation. Small caps are down today.

But just going forward, they might have a reason-- you might have a reason to think that they'll go up a little bit more, not only because they have broken out of a multi-year range, but this also ties back to what was happening this morning with the ISM report.

Here I have going back to 1980. ISM manufacturing is in cyan. And you can see, it's very closely tightly knit with the S&P 500 or Russell 2000 versus the S&P 500.

So when the Russell, when small caps are outperforming, that happens when the ISM is turning up and that's what's happening today. Suffice to say, there is a disconnect between what traders are thinking the Fed will do and the next move that we're seeing in the bond market.

JULIE HYMAN: Well, we'll see who wins that conversation. Thanks so much, Jared. Appreciate it.