Gold Prices Plummet Amidst Rising Yields and Dollar Strength
Gold prices fell to a two-month low on Monday after breaking below $4,230 support. Saxo Bank's Ole Hansen called this move gold's 'toughest test yet,' citing the surge in US 10-year real yields to an 18-year high of nearly 2.85%. A stronger dollar added pressure, sending gold down over 3% and silver about 5%.
State Street's Aakash Doshi believes gold could retest $4,000 this week, driven by Fed rate-hike bets and rising yields. However, he still expects $4,000 to hold as a floor and predicts $5,000 within six months.
MKS PAMP's Nicky Shiels points out that China, the rest of Asia, and emerging-market central banks continue to buy gold despite market volatility. This physical demand could set the floor for prices, even if paper markets dictate the current price.
StoneX is more optimistic about Q4, forecasting a weaker dollar due to a debasement trade or a deal reopening the Strait of Hormuz. This could lead investors to chase central banks into ETFs and futures, rather than fading the rally.