Gold inter-markets: intrinsic supports the ongoing corrective move

Continuous improvement in global risk sentiment and investors inclination towards riskier assets - like equity, has been the key factor denting the safe-haven appeal of the yellow metal, Gold, which is now headed to post its first weekly loss since last month’s historic Brexit vote. 

Improvement in investor risk-appetite is clearly depicted by a continuous slide in the Volatility Index (VIX) and the ongoing strong bullish momentum in the broader US equity index (S&P 500). Adding to this, a sharp recovery in US 10-years treasury yields and the USD/JPY pair is further supporting the presumption of investors moving away from traditional safe-haven assets. 

Moreover, the latest set of data points is further assisting to suppress worries over a possible global economic slowdown. Upbeat data released on Friday included Chinese GDP data for second quarter of 2016, which printed a slight better-than-expected growth of 6.7%. 

Further, US monthly retail sale recorded a healthy growth on monthly basis and monthly CPI also showed a steady rise, clearly pointing to the underlying strength of the US economic recovery and thus is assisting the US Dollar to witness a broad recovery. A strong US Dollar is usually seen as weighing on dollar-denominated commodities – like gold. 

The combination of post-Brexit calm and incoming upbeat global economic data has halted the yellow metal's strong near-term bullish trajectory since late May. Summing it all, the ongoing corrective move in the precious metal is supported by all the highly correlated intrinsic.