TIPS yield breaks support
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The 10-year TIPS yield broke primary support at -1.10% and is currently at -1.128%. Expect retracement to test the new resistance level at -1.10% but respect is likely and would warn of a decline, with a target of -1.60%1.
Gold has closely tracked the inverted 10-year TIPS yield over the past 15 years (the left-hand scale is multiplied by -1 to invert). The current divergence signals an advance in the Gold price.
Conclusion
The 10-year TIPS yield breach of primary support at -1.10% offers a target of -1.60%1 for TIPS and a target of $2200 per ounce2 for Gold.
Notes
- The target of -1.60% for the 10-year TIPS yield is calculated as the peak of -0.60% extended below primary support at -1.10%.
- The Gold target is estimated by extending -1.60% on the inverted left-hand scale across to $2200 per ounce on the right-hand scale.
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