Gold: OCBC cautious on near-term outlook

Lower US Treasury yields have failed to support Gold. OCBC strategists Christopher Wong and Sim Moh Siong flag renewed weakness in the metal despite declining yields and mounting geopolitical risks. In their view, surging Oil prices are rekindling inflation concerns and expectations that Fed policy will remain restrictive for longer, putting Gold under pressure. They maintain a cautious near-term stance: Gold needs easing Oil prices, lower real yields and a stronger price response to regain traction.

Lower yields fail to lift safe-haven Gold

"Gold came under renewed selling pressure overnight, falling more than 2.5%. Brent’s sharp rise amid renewed Middle East supply concerns added to inflation worries and expectations that the Fed may need to keep rates restrictive for longer. What was notable was that gold continued to weaken even as US Treasury yields fell sharply amid the global tech selloff."

"Neither lower yields nor heightened geopolitical uncertainty has been sufficient to support gold, suggesting that near-term sentiment remains fragile."

"We remained cautious in the near term, particularly as gold has struggled to respond positively to the recent decline in yields."

"An easing in oil prices and further decline in real yields could help gold stabilise, but we would want to see a better price response before turning more constructive in the near-term."

"Support at 4000, 3943 levels (recent low). Resistance at 4080, 4156 (21 DMA)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)