Gold Price Fundamental Forecast: Bullish
- Gold prices[1] capitalized on dismal US PMI figures as US Dollar[2] sunk
- XAU/USD may gain in the short-run on more disappointing US data
- Possibility of US Dollar gains in the medium-term may subdue gold
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XAU/USD Wrap
Gold prices spent most of last week in rather mute trade until a sudden surge of volatility on Thursday sent the precious metal rallying. Looking at the XAU/USD 4-hour chart below, we can see that it rallied at the expense of the S&P 500[4], US Dollar and local front-end government bond yields. This kind of trading dynamic reflected increased Fed rate cut expectations on a dismal set of US PMI data[5].
Gold Rises as US PMI Data Sinks USD and Bond Yields
Chart Created in TradingView
Gold Week Ahead
Gold’s sensitivity to unison behavior in the Greenback, S&P 500 and bond yields underscores its anti-fiat appeal rather than as a safe-haven asset. The yellow metal has no interest-bearing qualities, which are what typically give currencies their appeal. As an example, last week we saw the Australian Dollar[6] accelerate its depreciation on the buildup of RBA dovish expectations[7] which lead to a 90% probability that we may get a cut in June[8].
With that in mind and using last week as an example, the
