Gold Prices May Fall As Non-Interest Metals Continue Losing Out

Gold Price Fundamental Forecast: Bearish

Gold Price Outlook Talking Points:

  • Gold prices came under pressure as the US Dollar[1] and bond yields rose on the whole
  • FOMC[2] meeting minutes and Fed speak can echo this dynamic in relatively sparse week
  • This leaves the door open for gold price[3] consolidation and profit taking on slower days

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By the beginning of last week’s Friday session, gold prices had slumped to their lowest point this year so far. The anti-fiat asset, which bears no interest when holding, was undermined by rising government bond yields. This was not only in the US, but from around the developed world as well in places such as Australia, Canada, the United Kingdom. Yield curves steepened as the spread between US 10-year and 2-year yields widened.

Not surprisingly, the US Dollar rose and too at the expense of the yellow metal. Critical economic event risk was notably sparse, but an upward revision in US retail sales seemed to have fueled some greenback strength. Hawkish Fed monetary policy expectations firmed and Atlanta’s Fed President Raphael Bostic confirmed that up to 4 rate hikes this year could be correct.

All of this points to another week where the markets will probably focus on the expectations of a rise in borrowing costs and bond yields. The US economic calendar docket is similarly sparse when compared to last week apart from one notable exception, the FOMC meeting minutes

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