Gold’s prices have been driven lower over the recent weeks by the rising USD, rising US yields, and the impact that has had on real yields. There has not been an obvious catalyst for the USD strength and rise in yields aside from the belief that the Federal Reserve will need to keep rates higher for a longer period. See here for the relationship between the USD, gold, and real yields.

What’s gold next catalyst going to be?

Any indication of a change in US monetary policy will be a major potential catalyst for gold. On Friday, Jerome Powell will speak, and markets will be looking for clues as to where he sees US monetary policy heading. If Jerome Powell signals ‘mission accomplished’ regarding the Fed hiking interest rates and rate cuts for 2024, then gold could rally on a weaker USD and falling yield picture. However, if Powell indicates higher interest rates to come, then gold’s downside could continue.

Are gold prices expected to gain?

According to Bloomberg’s Market’s Live Pulse online survey, respondents expected gold to trade above $2000 per ounce 12 months from now. This was the median response of 602 responses to the survey. Gold’s decline is not expected to last, and the Fed is still expected to signal the job is done at some point in the next few months, and that would be the time you would expect gold to start gaining again. The ongoing geo-political tensions between the US and China, Russia’s moves into Ukraine, and China’s property crisis are all other reasons that could boost demand for gold. The big miss in yesterday’s PMI print sent a strong bid into US bonds yesterday, which weakened the USD, sent real yields lower, and lifted gold prices sharply higher.

Technical look at gold

Here is a look at the major support levels at $1850 and $1675 on the weekly chart that remain in gold where medium-term buyers could be expected to enter. $1900 is the key level in the near term with bulls needing to keep above that level to have a near-term chance of running above $19.