Gold Price Fundamental Forecast: Bearish
- Gold prices’ inverse link to the US Dollar has strengthened recently
- US econ. data may underperform, fueling risk aversion as gold sinks
- Hazards for the yellow metal also include more dovish RBA, Brexit
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Gold prices spent most of last week declining, with the commodity dropping almost 1.5 percent in its worst single-day performance since the beginning of March on Thursday. The anti-fiat precious metal, thanks to a lack of interest-bearing qualities, inversely tracked the US Dollar. At one point, it even weakened alongside a pullback in the S&P 500[3]. This undermined its often-associated trait as a safe haven.
Lately, XAU/USD has been tending to be more sensitive to movements in the Greenback. Looking at the chart below, the yellow metal fell despite a deterioration in front-end government bond yields from developed countries such as the United States and Germany. Simultaneously, its correlation with DXY[4] has been becoming increasingly inverse since the end of February.
Gold Versus Developed Nation 2-Year Government Bond Yields and US Dollar
Chart Created in TradingView
Gold Week Ahead
With that in mind, gold prices[5] will be closely watching what could impact the US Dollar in the week ahead, and there is much to anticipate. Ahead, data such as US retail sales, durable
