Tuesday, Feb 18, 2025–High Volatility Expected

For those who want to learn how to understand and analyse data. I will add another post for the lazy. Tuesday presents several high-impact data releases, including the NY Empire State Manufacturing Index (expected at -12.60), the NAHB Housing Market Index (expected at 47), and multiple U.S. Treasury Bill Auctions (3-Month, 6-Month, and 52-Week). Additionally, the TIC Net Long-Term Transactions report is expected at $79.0B, providing insight into foreign investment in U.S. assets. A weaker manufacturing index could boost gold, as it signals economic slowdown. However, strong demand for Treasury bonds (lower yields) could further support gold, while weak bond demand (higher yields) may pressure it downward. Equities, VIX, and Their Relationship to Gold Stock indices, including the S&P 500, NASDAQ, and Dow Jones, remain bullish, but if economic data disappointed a bit with the releases, a correction could occur, supporting gold. The VIX at 15.43 (-2.9%) suggests low volatility, but you should watch for any spikes, which could push gold higher as a hedge against uncertainty. If equities continue their rally, gold may struggle to break above resistance levels, but any stock market pullback could provide strong support for the metal. U.S. Treasury Yields & Their Effect on Gold Bond yields remain a crucial factor in gold's movement. The 10-year Treasury yield stands at 4.536%, down 9.2bps, reinforcing gold's attractiveness. You should monitor closely Tuesday's Treasury auctions, as weak demand could push yields higher, hurting gold, while strong demand could lower yields, supporting it. Falling yields reduce the opportunity cost of holding gold, making it a more attractive investment U.S. Dollar Strength and Its Impact on Gold The U.S. Dollar Index (DXY) remains strong at 104.1, influencing gold's price inversely. Key currency pairs to watch include EUR/USD (0.9596), USD/JPY (153.16), and USD/INR (86.74). A weaker U.S. dollar would support gold, while continued dollar strength might limit gains. If upcoming economic data weakens the dollar, expect gold to rally toward $2,950 and beyond.