Aggressive Monetary Policy Continues to Hamper Gold

Gold Forecast, Gold Outlook, Gold price Today: The current macroeconomic landscape is way different now as global central banks reverse prior stimulatory policies in an attempt to calm surging inflation. Higher interest rates reduce gold’s allure as interest bearing investments and other alternatives start to become attractive once more.

RECESSION CONCERNS AND LOWER TREASURY YIELDS TO PROVIDE SHORT-TERM SUPPORT FOR GOLD?

US treasury yields and real yields, measured using the 5-year breakeven inflation rate, have dipped recently which may support falling gold prices for now. A lower breakeven rate assumes lower future inflation and less aggressive tightening, perhaps even looser monetary policy. Lower anticipated inflation attracts lower interest rate assumptions, which may offer support for gold.

GOLD (YELLOW METAL) TECHNICAL LEVELS

Since we are at a potentially defining point for gold, I have turned to the weekly chart to assess downside risks consistent with the current bearish trend. The psychological level of $1800 holds gold prices at bay for now but a breakdown of the level with subsequent momentum places $1774 and $1760 as the next levels of support.

$1774 is a level that witnessed a significant amount of support in 2021 – acting as a pivot point – and appears near the 23.6% Fib of the big 2020 move at $1769. The larger zone of resistance holding up gold prices for most of 2021 is shown as the red rectangle with the midpoint of $1760.

Gold Price Forecast: Keep Eyes on $1,707 and $1,692
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1 thought on “Aggressive Monetary Policy Continues to Hamper Gold”

  1. Gold is having a difficult time staging a meaningful rebound following Tuesday’s sharp decline amid broad dollar strength. XAU/USD posts modest daily losses near $1,760 ahead of the ISM Services PMI data from the US and the FOMC’s June meeting minutes.

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