XAUUSD rising while Inflation dropping. Historically BULLISH!Gold (XAUUSD) has been practically on a non-stop aggressive rise since the late 2022 Low. What's more interesting is that during this 2.5-year Bull run, the U.S. Inflation Rate (red trend-line) has been on a sharp decline, which is something you wouldn't traditionally expect out of a save haven asset like Gold.
On the contrary, Gold has been historically used as a hedge against high inflation, so when Inflation drops, you would have technically expected for Gold to drop too (and vice versa).
Since 1970, there have only been another 4 (relatively long) time periods when Inflation declined while Gold increased. On all occasions, Gold extended the rise by at least 1 year even when Inflation reversed.
In our opinion, the current divergence looks more like 1970 - 1972 and 2008 - 2009. This suggests that Gold is still within a Bull Cycle and has some more room to rise before a new Bear Cycle starts. Long-term we remain bullish on Gold.
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