Gold Prices Risk Pullback to $4,215/oz Amid Mixed Signals

The World Gold Council (WGC) warns that gold prices may pull back to $4,215/oz as short-term momentum fades.

The US Treasury and Federal Reserve are sending mixed signals to the market, but recent events have been net negative for gold on balance. The WGC analysts say that while the US Treasury appears to want lower yields, the Fed wants lower inflation, neither wanting to break the economy.

The release of still-hot U.S. inflation data and Federal Reserve Chairman Jerome Powell's hawkish speech at the Jackson Hole Symposium boosted bets on near-term Fed hikes, increasing gold's perceived opportunity cost and reducing its appeal.

Turning to the technical picture, WGC analysts say that gold is at risk of a pullback to its 55-day average as short-term momentum turns lower and global bond yields continue to rise. The market has fallen back below its 200-day average, leaving it in what may be a developing sideways range.