After a challenging three months, gold is again starting to find its mojo and may soon attempt to challenge key resistance at just above $1,800/oz. Inflation “head fake” and dovish fed may be a manna for XAU/USD, according to strategists at TD Securities.
See: Gold Price Analysis: US Treasury yields and USD to ease later in the year, allowing for XAU/USD gains – HSBC
Gold can shine should inflation expectations outpace nominal rates
“It would not be a surprise to see gold move modestly north of $1,800/oz in the not too distant future, as it looks as though the curve overreacted back in March when yields jumped, and it appears that a steady-state has been reached for a time before US10s move toward two percent by the end of the year.”
“Since the evidence suggests real rates are most responsible for gold’s price action, continued negative yields across much of the curve suggest that the world should again see gold test $1,900+/oz, before the end of 2021.”
“Before the yellow metal shoots through key resistance levels and rallies another $120/oz to our year-end target, the market will need to have a higher level of confidence that the rise in rates won’t be re-energized by more favorable economic data, and that the Fed will prevent rates from rising to the point where they can adversely impact financial conditions.”
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