GC Correlations: DXY, Yields, and Risk Assets
Gold futures (GC) don’t move in a vacuum. They track a handful of macro relationships that repeat over and over. If you don’t understand GC’s correlations, you’re basically trading blind, because these relationships explain 80% of GC’s trend direction.
The #1 GC Correlation: Real Yields
If you understand nothing else, understand this: GC trades opposite real yields.
- Real yields up → GC down
- Real yields down → GC up
Real yields = nominal Treasury yield − inflation expectations. This correlation is the backbone of every big GC move.
The #2 GC Correlation: The U.S. Dollar (DXY)
GC is priced in USD per ounce. A stronger dollar makes gold more expensive globally, pushing GC down.
- DXY up → GC pressured lower
- DXY down → GC finds support
This correlation weakens only when real yields dominate the entire macro landscape—like during the 2022 tightening cycle.
GC and Bonds (ZB, ZN)
GC tracks bonds because both respond to interest rates and inflation expectations. When bond prices rise (yields fall), GC usually rises too.
- ZB/ZN up → GC up
- ZB/ZN down → GC down
GC, bonds, and real yields form a triangular macro relationship you need to watch every day.
GC and Equity Markets (ES, NQ)
GC and equities have a weak inverse correlation. It only strengthens during genuine risk-off events.
Most of the time:
- ES up → neutral impact on GC
- ES down → mild GC support
But during panic, credit scares, geopolitical shocks, or liquidity stress, GC becomes a temporary hedge and can rally sharply as ES dumps.
GC and Risk Assets (Crude Oil, Copper, Crypto)
GC isn’t risk-on like oil or copper. GC isn’t a liquidity rocket like Bitcoin.
But correlations exist:
- Crude Oil (CL): inflation proxy → can lift GC if inflation expectations rise
- Copper (HG): economic growth proxy → negatively correlated during slowdowns
- Crypto: weak correlation; both react to liquidity but in very different ways
GC trades macro stability. Risk assets trade macro growth and liquidity.
GC and VIX (Volatility Index)
GC correlates with VIX only during real fear events. Normal volatility spikes do NOT reliably push GC up.
Example:
- VIX 30+ with falling yields → GC explodes upward
- VIX 30+ with rising yields → GC does nothing or falls
Risk-off + falling yields = GC rocket fuel. Risk-off + rising yields = confusion and chop.
GC and Inflation Data
GC responds violently to CPI, PCE, and inflation expectations. But remember:
- GC rallies when inflation rises faster than yields
- GC dumps when yields rise faster than inflation
Inflation alone doesn’t move GC—it’s the relationship between inflation and yields.
How to Use These Correlations in Real Trading
1. Check real yields every morning
If they’re rising, GC longs are lower probability. If they’re dropping, GC longs are favored.
2. Track DXY intraday
Sharp DXY rallies kill GC breakouts instantly.
3. Use bonds as confirmation
If GC and ZB/ZNU are diverging, something is off.
4. Only trust GC/ES inverse correlation during real fear
Normal ES weakness doesn’t mean GC will rally.
5. Watch correlations during news
After CPI/NFP, if real yields drop AND DXY drops, GC usually prints its cleanest trend of the month.
Final Takeaway
GC is a macro instrument glued to real yields and the dollar. Everything else—equities, risk assets, VIX, crude—matters only in context. Once you track correlations correctly, GC stops being a mystery and starts behaving exactly how macro traders expect it to.