GOLD PRICE WEEKLY FUNDAMENTAL FORECAST – BEARISH
- Gold price[1] action gained nearly 1.5% this past week after closing out on a positive note
- Precious metals like gold and silver[2] face selling pressure more broadly alongside bonds
- XAU/USD[3] could resume its slide if the upcoming Fed meeting pushes real yields higher
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Gold and silver prices perked up a bit last week to put an end to their recent string of losses. XAU/USD notched a gain of 1.44% while XAG/USD edged 2.74% higher on balance. Precious metals likely benefited from a slightly softer US Dollar[6] as the recent surge in real yields paused. Gold price action generally holds a strong inverse relationship with real yields as highlighted by the chart below.
That said, gold prices might come back under pressure looking to the week ahead. This is in consideration of the prevailing trend higher in real yields and event risk posed by the upcoming Federal Reserve[7] interest rate decision. The scheduled Fed announcement expected to cross market wires on Wednesday, 17 March at 18:00 GMT will include updated economic projections, which stands to weigh materially on the direction of real yields and gold.
GOLD PRICE CHART WITH 10-YEAR US REAL YIELD OVERLAID: DAILY TIME FRAME (JUN 2020 TO MAR 2021)
Dot plot projections for the target Fed funds rate, in addition to the median inflation forecast provided by FOMC[8] officials, could come under scrutiny in particular. Gold prices might react positively if there is a noteworthy upgrade to core PCE inflation, but this could be offset if the central bank brings
