Gold Sees Bullish Opportunity as Real Yields Peak, Analysts Say

Research firm BCA sees a bullish opportunity in gold as real yields peak. Analysts at the firm argue that the recent correction has run its course and that the U.S. dollar will eventually turn from a headwind into a tailwind for bullion.

According to Roukaya Ibrahim, chief commodities strategist at BCA Research, investors should focus less on inflation and more on the outlook for real yields. She notes that gold has held the $4,000-an-ounce level despite recent macro headwinds.

BCA's report argues that gold has returned to trading primarily as a macro asset after several years during which central bank buying overwhelmed traditional market drivers. The firm believes real rates and the U.S. dollar have once again become the dominant forces determining bullion prices, while central bank purchases now provide a floor under the market.

The report also pushes back against the common perception that gold is primarily an inflation hedge, instead arguing that inflation only benefits bullion when it undermines confidence in the Federal Reserve and suppresses real yields. BCA sees longer-term support coming from structural forces, including reserve diversification away from the U.S. dollar and persistent central bank buying.