Gold Holds Strong Despite High Yields as Deutsche Bank Sees Potential Gains Ahead

Gold's recent resilience has been impressive, especially given the high-yield environment. Despite the pressure from bond yields and crude oil prices, gold has held up surprisingly well.

Daniel Ghali, head of metals research at Deutsche Bank, notes that while gold has faced a strikingly different outlook for the Fed, with US 10-year yields above 5% and crude oil trading north of $100 a barrel, it still hasn't printed a new low since July. This is considered strong price action.

Ghali believes that the setup right now echoes those seen in 2022, with a bearish positioning setup in gold. However, this is a different regime for the market, with official sector purchases running at more than double the clip of 2021 and institutional investors' pool of reserves growing by roughly 70% since then.

Gold's oversold status and underownership make it an attractive investment opportunity, according to Ghali. He sees this as a strong setup for gold to move forward, potentially triggering its next leg up in the rally.