Gold Price Analysis: Softer demand from central banks and jewellery to cap any upside – HSBC

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Gold underperformed year-to-date as economic recovery and risk-on sentiment continue. Strategists at HSBC downgrade gold to neutral because they think it will be difficult for the precious metal to rally strongly from current prices amid now higher bond yields.

See – Gold Price Analysis: XAU/USD to suffer some near-term weakness – Commerzbank

XAU/USD has been weak as inflation expectations have pushed higher

“Inflation expectations remain elevated but appear to have peaked. We think inflation concerns will be temporary and mild with central banks still committed to keeping loose monetary policy.”

“The US 10 Year Treasury yield appears to have stabilised around 1.6% after hitting recent highs of 1.75% at end-March signaling that inflation concerns may be abating for the time being.”

“Short-term, we have downgraded gold to neutral as we don’t expect significant capital appreciation over the next 3-6 months, especially with bond yields still elevated.”

 

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