Bonds and US Dollar Sell Off, Gold Remains The Shining Safe Haven
Excelsior Prosperity w/ Shad Marquitz (04-11-2025)
Gold closed Friday at all-time daily and weekly highs, once again.
So, let’s get into it…
As someone that follows the future pricing around the clock, (because for better or worse, the world follows gold futures pricing in US dollar terms), the TradingView chart above is the most accurate to what played out since the end of last week to present.
One can see on the very first peak to the far left of the chart on April 2nd the first move up over $3,200 in history (to $3,201.60 to be exact), and then it dove down a couple hundred dollars to make a low on Monday April 7th at $2,970.40.
However, after the Wednesday April 9th news broke that the Trump administration was pausing the global 10% tariffs (except for China) for 90 days the yellow metal made an ascent up from there to close today on Friday at a new all-time daily and weekly high at $3,254.90. Aftermarket trading saw gold futures end the day even higher at $3,244.60. Truly epic pricing action, and quite a rollercoaster week.
What has been most bizarre during this whole process is that the futures contracts rolled over the last week of March to the forward-month June futures contracts on almost every platform (except Stockcharts, that only displayed the March contract all the way up through the very last day of March, and then went to the April contract which no other platform I’m aware of is using).
Stockcharts didn’t even show gold futures briefly tag the $3,200 mark (Stockcharts shows the highest level hit last week as $3,167.77 because of using the April contract).
Then today on Friday, Stockcharts is displaying the all-time daily/weekly closing high to be $3,236.55. It also shows the highest level hit as $3,245.22, when on all the futures charts, when the June futures got up to a high today of $3,263. Using those numbers wouldn’t be the end of the world, but it would be like flying a plane using totally different gauges and measurements of data.
Why knit-pick these numbers? Because this is “Technical” Analysis… We want to be technical and pay close attention when any asset class pierces up to new price levels, or when it makes an all-time daily or weekly high close; because that is quite significant. Unfortunately, now there are going to be PM investors pulling and quoting totally different numbers on a day when history was made.
Regardless, the point is that after such a totally wild and woolly week in the markets, it was gold alone that really separated from the rest of the markets and the rest of the traditional safe havens to be the shining light and refuge from the volatility and market chop.
This weekly record close had me reminiscing, once again, on the youth brigade on internet forums and the mainstream financial media from a couple of years back casting shade on gold bullion by labeling it as nothing more than “Boomer Rocks.”
These “boomer rocks” have been doing an excellent job as a store of value in the face of this recent macroeconomic maelstrom.
Maybe that is why global central banks keep buying record amounts of these “pet rocks” and “barbarous relics.” ;-)
In past turbulent periods in the markets, investors traditionally would have piled into bonds or the US Dollar as other safe havens, but neither was getting a strong bid this week, and they were actually selling off on all the chaotic news.
The US Dollar closed today on Friday at a 52-week low of 99.76, after having sunk down to 99.03 at one point intraday.
This low today came in even under the August and September lows of last year at 100.51 and 100.16 respectively.
A falling dollar can be a tailwind for gold, and was definitely so the end of this week.
The US Dollar has definitely been in a bearish posture ever since losing the 50-day Exponential Moving Average (EMA) back in February.
Now, it is probable that the US dollar is getting a bit stretched to the downside technically at this point. Just look at how far below the 50-day EMA (currently at 104.58) that it is after today’s pricing action. Also, today’s pricing created a long red reversal candle, with a long lower wick (where pricing went down, hit 99.03, and then recovered back up to close at 99.76).
If the US Dollar does get a short-term bounce higher, then look for gold prices to potentially slow down their advance or possibly even reverse back down.
With bonds, there are many time periods to choose from but the (TLT) iShares 20+ Year Treasury Bond ETF is a good proxy for the longer-duration bonds.
· As noted in last week’s article, when the market volatility was escalating on Wednesday April 2nd through Friday April 4th, the bonds were getting an early-morning bid, but then selling off during the day, only to open higher the next morning but then sell off during the day. This produced a series of 3 red candles that kept climbing higher in price, but they were still red candles where the pricing closed lower than it opened; (which was a bit unusual, but foreshadowed the move lower this week in bonds.)
· On Monday April 7th, the long bonds in (TLT) gapped down at the open, and then sold off during the day, along with the markets in a big red candle lower.
· Then on Tuesday, bonds kept selling off, and TLT moved below its 50-day EMA into a bearish posture.
· Wednesday was a wild ride lower to 85.89, but then it recovered with bonds getting a bid. Thursday then sold off to a lower close than Wednesday’s open, and Friday saw TLT open at even lower price, then move even lower than that down near 85, but then rebound the end of the trading session to close the day slightly higher at 86.89 along with the general US equity markets rally.
· Overall, this was a big move in bonds over the last week, where TLT fell from a 94.09 on last Friday’s peak to close this Friday at 86.89.
Treasury Yields have an inverse correlation of what bonds do; hence, buying in bonds sends rates lower, and selling in bonds sends rates higher.
The most watched of all the treasury yields is the 10-year, and it is a key input in many trading algorithms, and also for many carbon-based lifeforms analyzing the markets. It also has a huge influence on individual consumer loans. Simply put, it is crucial to keep an eye on daily trends with the 10-year yield, as a key macroeconomic metric and benchmark.
Back in February, Treasury Secretary Scott Bessent mentioned in a few interviews that the Trump administration wants to “focus on lowering long-term interest rates, which are largely influenced by the yield on the 10-year US Treasury note.”
https://www.cnn.com/2025/02/06/economy/bessent-interest-rates-without-fed/index.html
“The rates Americans pay on mortgages, credit cards and other kinds of loans are largely based on that of the 10-year Treasury yield. While the Fed’s monetary policy actions influence it, the 10-year Treasury yield is free floating, meaning that any number of factors can cause it to go up or down beyond the Fed.”
We can see that while bonds were being bought in early April, the 10-year yield fell to a low of 3.835 on April 4th.
Then for most of this week as bonds generally were selling off lower, the 10-year yield rose to close on Friday at 4.498 (which is actually a pretty big move in just 1 week in this generally more stable market).
It was just strange to see bonds selling off instead of being bought when money was looking for a place to hide out from the macroeconomic storm.
Bond yields in most nations also tie in with how global currencies behave, and in the US the 10-year yield has the most impact on the US dollar.
Traditionally falling rates are a tailwind for gold, and rising rates are a headwind for gold. This is because when cash can get a better fixed yield in money markets and CDs then that de-emphasizes gold which doesn’t pay a yield. However, gold was still rising the end of this week even as bonds were being sold off and treasury yields were rising.
This was not just a turbulent week in almost all markets. It was also quite telling that gold was really the only safe haven, (other than buying the S&P 500 CBOE Volatility Index VIX for protection), that was offering investors a refuge from all the uncertainty.
There was definitely a shunning of US assets over the last 2 weeks, with bonds, the US dollar, and US general stock indexes all selling down hard. However, then we saw that insane 1-day snap-back rally this last Wednesday April 9th in US equities (when the news broke that tariffs were paused for 90 days). Then Thursday returned to a red bearish market session, and yet on Friday the general US equity markets clawed their way back higher again as things calmed down a bit.
It is also worth noting that the gold equities were resilient in light of all the macroeconomic and geopolitical headwinds hitting most markets. After a whipsaw last 2 weeks, GDX closed the week up at $49.70 on Friday May 11th, definitively higher than the 2020 peak in GDX at $45.78. That is bullish.
The GDXJ made a new 52-week high, closing Friday at $61.22 (after making an intra-day high of $61.58), which is also bullish.
However, before people break out their party hats… even $3,250 gold couldn’t get the intermediate gold producers held inside of the GDXJ to break up through its August 2020 peak of $65.95.
Think about it – Gold has tacked on ~$1,200 since then, providing the widest production margins of all time in the gold mining sector, (and likely record Q1 and Q2 revenues and cash flows); and yet the mid-tier and smaller gold producers and largest gold developers inside one of the most publicly-traded gold equity ETFs can’t seem to even get valued higher than the post-pandemic rally from 4 years ago when the gold price and margins were much lower… (??)
The GDXJ really should be joining the GDX in making higher highs above the 2020 peak, so this is still an area of concern. Quite honestly, it is really a baffling valuation considering the macro fundamentals for the gold producers right now. This has been the perfect storm over the last 2 years for the gold stocks, but you wouldn’t know it by looking at the GDXJ chart. This just shows the lack of bullish sentiment and momentum in this sector, and how much more work that the gold stocks need to do in a big return-to-the-mean and rerating higher.
As mentioned in previous articles, and for some sobering context; the GDXJ would have to essentially triple to get back to its all-time highs from the last cycle at $179.44. Those levels were achieved when gold ran up to $1923, and when margins were around $680. Let that sink in for a moment…
Yes, it is fine to celebrate the recent moves higher in the gold stocks, and it has been bullish action the last 2 years…. But, let’s curb the enthusiasm back a bit, and remember just how lackluster these moves higher in the gold stocks have been in the historical context. Many people, including me, expected to see more leverage at $3,250 gold and $1,300- $1,600 per ounce average production margins.
GDXJ has more ground to cover just to break above the 2020 peak, and a ton of work to do to even come close to making new all-time highs in this cycle.
If there ever was an environment where the mid-tier and smaller gold producers held inside the GDXJ should have sent this ETF well north of $100 or $150 this has been it… and yet, despite all the underlying metal’s price momentum in gold and the hugely positive economics for the gold miners for the last few years, they’ve barely even gotten off the mat in the big picture valuation.
Let’s wrap up this article with an engaging podcast discussion from Brien Lundin, Editor of Gold Newsletter and host at the New Orleans Investment Conference (scheduled for Nov. 2–5 this year). Brien joined us over at the KE Report this last Thursday, to talk about gold’s role during this extreme period of market turmoil driven by tariffs, tweets, and geopolitical instability. We also note the strength of gold stocks in the face of these market tantrums.
Brien Lundin - Market Chaos & Gold's Surge: Safe Havens, Tariffs & A Precious Metals Divergence
Thanks for reading and may you have prosperity in your trading and in life!
· Shad