Gold Price Takes Hit After Warsh Speech, $5,000 Forecast Still Intact
The price of gold fell sharply after Fed Chair Kevin Warsh's speech at Jackson Hole, causing some to question Crédit Agricole's $5,000 year-end forecast. The bank's call was put to a tougher test as the XAU/USD price dropped by over 2% on Friday, ending the day around $4,457.
Despite this setback, Crédit Agricole maintains that its debasement thesis remains intact. According to the bank, gold has become a key beneficiary of efforts to restrain long-dated Treasury yields, which have worsened the risk-reward trade-off for UST investors and increased bullion's appeal as a safe haven.
The bank argues that policy moves have fanned US inflation fears and lowered US real yields, strengthening gold's role as a currency-debasement hedge. It also sees geopolitics feeding into this trend, with the weaponisation of the Dollar through sanctions encouraging renewed reserve diversification.