Commodities
Gold Stuck in Wedge Pattern as Central Banks and Real Interest Rates Weigh
Gold's price has been trending downward since it hit $5,600 per ounce on January 29 this year. The precious metal is now stuck in a wedge pattern, trading at around $4,000 per ounce.
The shift in central bank demand and real interest rate dynamics may be the cause of gold's recent correction. In Q2, central banks purchased 289 tons of gold, but with notable fluctuations and occasional sellers.
China's opaque gold accumulation and retreat from paper gold signal structural demand for gold. However, official data may understate actual reserves growth.
The bullish outlook for gold hinges on falling real interest rates and a technical breakout above the wedge pattern. If this doesn't happen, gold prices could drop further to $3,500 per ounce.