Gold Price News and Forecast: XAU/USD a sustained break above 1768 must be seen as the next buy signal
|Gold remains the best hedge against inflation
Gold broke out to fresh multi-year highs above $1770 as real Treasury yields continued to plunge. US 10-year Treasury Inflation Protected Securities (TIPS) dipped to new 7-year lows at –0.66% and have declined by 14bps in the last 6 days. The front end of the curve has also declined more sharply in the last couple of sessions, with 2-year real rates at –0.81%. Indeed, all along the curve real rates have come down with the 30-year at –0.14%. Gold has also found some bid on a softening dollar in recent days, with the dollar index down 1% in the last two sessions. Fears that global central banks are fuelling a latent inflation boom with aggressive increases in the money supply continue to act as the longer-term bull thesis for gold.
Gold: A sustained break above 1768 must be seen as the next buy signal
Gold Spot had a 1 day consolidation phase holding the bull market high seen in May at 1762/64 & first support at 1744/42 perfectly. We wrote: we are not severely overbought & this is a strong bull trend. So shorts may actually be risky. A sustained break above 1768 must be seen as the next buy signal after the 2 month consolidation phase (very common in a bull markets)... Buy signal confirmed as we hit the first breakout target of 1773. Outlook remains positive.
Silver Spot bottomed 3 ticks above best support at 1760/50 & higher also of course, through 1760/50 to re-target 1780 & 1800/10. We topped exactly here over night but outlook remains positive.
Gold sits near multi-year tops, around $1775 level amid softer risk tone
Gold traded with a mild positive bias through the early European session and was last seen trading near multi-year tops, just BELOW $1775 level.
Despite the latest optimism over a sharp V-shaped global economic recovery, investors remain concerned about the rising number of coronavirus cases globally. This coupled with a turnaround in the global risk sentiment – as depicted by a sharp fall in the equity market – extended some support to the safe-haven precious metal.
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