Strategists at Deutsche Bank see gold investment demand weakening as the yellow disinvestment has unwound 1/3 of pandemic era accumulation. XAU/USD is forecast to drop considerably towards the $1,500 level.
See – Gold Price Analysis: A decline in Treasury yields to lift XAU/USD – OCBC
Key quotes
“We see downside as investment demand weakens further while rising physical demand in China and India provides an offset but fails to keep pace.”
“The behavior of gold in the first quarter lends credence to the importance of real yields. While the initial rise in nominal yields was neutralized by higher inflation expectations, Feb/Mar steepening outstripped reflation. The lift-off in real risk-free yields from record lows has potential to sustain the gradual unwinding of investment accumulation since early 2020, now about 1/3 of the way through.”
“We do not see demand elasticity of China and India physical demand providing sufficient support before $1,500/oz.”
“We think silver will be comparatively resilient in a global recovery, although more so under risk-friendly steepening than disorderly tantrum-like bouts, in which cases silver tends to weaken more rapidly than gold.”
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