Gold Faces Headwinds Amid Stronger Dollar and Rising Bond Yields

Amy Gower, an expert in gold markets, believes that the metal is facing significant near-term pressure due to rising long-dated bond yields and a stronger US dollar.

As a non-yielding asset, gold becomes less attractive when investors can earn higher returns elsewhere. However, Gower notes that despite these headwinds, gold remains well supported, trading above $4,000 an ounce.

Gower points to strong physical demand, including central bank buying and purchases from China and Poland, as evidence of this support. She also notes that Chinese gold imports have exceeded PBOC reserve additions by over 10 times, and gold ETF holdings have been rising through September, which is unusual during a Fed hiking cycle.

Gower attributes the continued demand for gold to concerns about currency debasement, government debt, and fiscal sustainability. She believes that these long-term supports will outweigh the near-term headwinds facing the market.