Gold is a really interesting juncture now both technically and fundamentally speaking. Here are some of the key factors influencing gold right now.

Firstly, real yields. Real yields are the bond yield minus inflation. Falling real yields is good for gold, and rising real yields is bad. The recent patient stance from the Fed means that the recent surge in US bond yields can pull back. Now this means that real yields should fall as well since inflationary pressures remain the same. This is what has been lifting gold post the Fed interest rate decision.

So, this is the key to note. As long as inflation keeps rising/elevated, but the Fed remains patient on raising rates then that will be a support for gold.

Secondly, the USD influences gold as gold is paired with the USD. Remember that although gold is a commodity the XAUSD often acts as a sort of hybrid between a currency and a commodity. Now to get the very best opportunities in gold we also need to see the USD moving in a way that complements gold. The USD has a strong impact on gold. USD strength hinders gold and USD weakness helps gold higher. A patch of USD weakness and then gold should surge strongly higher into $1900.

Finally, gold seasonals are excellent around the end of the year. If you take the time between now and the end of February you can see that gold has risen 72% of the time in the last 25 years and had an average return of 3.89%. The physical demand for gold often picks up around the end of December. So, the end of December is often the very best time from a seasonal perspective to buy gold.

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