Gold Price Forecast: XAU/USD under pressure near term, but structural drivers are intact – ANZ
|The Gold price has retreated 5% from this year’s high of $2,060. Economists at ANZ Bank analyze XAU/USD outlook.
Shifting expectations of the terminal rate are a short-term headwind
Tightness in the labour market and strong economic data are likely to keep the Fed hiking rates. This leaves a risk of pushing real rates higher in the short-term. And Gold is likely to underperform in such an environment.
Nevertheless, we hold our positive view for the medium term, as structural drivers remain intact. The ongoing decline in inflation will ultimately see the Fed pause its interest rate cycle at some point this year. Normally US yield start retreating at this point, reducing the opportunity cost for Gold investing.
A pause in rate hikes by the Fed amid other more hawkish central banks should see the US Dollar likely to weaken in the second half of this year. Further, the risk of a US recession is not completely off the table, which should attract haven fund flows into Gold into 2024.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.