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Strategists at OCBC Bank estimate gold’s fair value range at $1625-$1725. With spot gold currently trading at around $1730, there is scope for XAU/USD to correct downwards.  

Gold is relatively rich compared to the current levels of US 10-year Treasury yield

“We have been highlighting gold’s appeal as an inflationary hedge since the start of the year but the market appears to place that feature as a low priority, preferring to ride along the inflation/reflation theme by piling into risk assets.”

“The mood surrounding Treasury yields has shifted and the market is now looking at how much higher rates can go, which in essence is negative for gold prices.”  

“We turn bearish on gold in the short-term and neutral in the medium to long-term.”

“We see fair value at $1625-$1725 based on current inputs.”