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Gold Price Forecast: Gold Continues to Shine Despite USD Gains

Gold Price Forecast: Gold Continues to Shine Despite USD Gains

Justin McQueen, Strategist

Gold Price Analysis and News

  • Gold Unscathed by Traditional Risk Off
  • Real Yields Deeper into Negative Territory Favours Gold Bulls
Gold Forecast
Gold Forecast
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Gold Unscathed by Traditional Risk Off

A somewhat rare occasion of a traditional risk-off move during yesterday’s session, with the USD firmer alongside US Treasuries, while equities experienced a pullback as oil prices dropped. The direct cause of what led to the sharp moves, particularly in the FX space is up for debate, however, yesterday’s rather weak US ISM Non-Manufacturing PMI did exacerbate the risk-off price action. That being said, gold prices largely escaped much of the weakness across the board with the pullback in the precious metal grinding to a halt at technical support with the 100DMA. In turn, with gold quickly back above the psychological 1800 level, this will likely provide some encouragement for bulls.

Real Yields Deeper into Negative Territory Favours Gold Bulls

While the firmer USD complicates the short-term bullish narrative for gold, the persistent decline in real yields provides a strong tailwind for the precious metal. US 10yr real yields are currently at the lowest level since January and thus with gold hovering at 1800, the precious metal has some catching up to do. As such, the two topside areas to watch will be 1815 (yesterday’s high) and 1830 where both the 50 and 200DMA resides. My bias remains for gold prices to edge higher in light of the continued move lower in real yields while technical offer a bullish RSI divergence, however, the recent price action in the USD does provide a cause for concern. FOMC minutes out tonight are likely to sit on the hawkish side of the spectrum given the pivot at the June meeting. That said, I am somewhat dubious whether it will be notably market-moving given the slew of Fed speakers we have had since the June meeting. Levels on the downside to watch is 1790 and 1760.

Gold vs US 10Y Real Yields (Inverted)

Source: Refinitiv

Gold Chart: Daily Time Frame

Source: Refinitiv

Gold Mixed
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -2% -13% -5%
Weekly -14% 3% -10%
What does it mean for price action?
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