Gold Price Analysis: Three factors to drive XAU/USD higher – DBS Bank


Gold has broken out of the downward trend since April 2021 and is on the way to retest the previous high. Factors that could drive gold prices higher include: 1) Negative real yields 2) Recovery in utility demand and 3) Gold remains a good hedge in uncertain times and provides a good alternative to diversify asset portfolio, analysts at DBS Bank report.

See – Gold Price Analysis: XAU/USD still has legs to inch higher – OCBC

XAU/USD to trade at $2,000/oz by year-end 2021 

Negative real yields could deliver boost to gold 

“The US Treasury Inflation-Protected Security (TIPS), which is a US Treasury bond with interest payments pegged to inflation, is still locked in the negative yield territory. Negative real yields indicate a loss on guaranteed capital and hence makes gold a more attractive asset class as a form of investment given that gold bears no interest rates.” 

Diverse users for gold; expect demand to pick up

“Gold has diverse uses, in jewellery, technology, by central banks and as a form of investment. We expect demand from these three segments to pick up in 2021 given the economic recovery and rising income which is often associated with higher demand for jewellery, technology, and long-term savings. The three segments combined represent more than 90% of total gold demand.”

Gold is still a good hedge in uncertain times despite forecast downgrade

“We revised down the year-end 2021 gold forecast to $2,000/oz, in view of the higher bond yield forecast and the delayed timing for the peaking of USD by one quarter. Despite the downward revision in gold, the yellow metal remains a good hedge in uncertain times, and is a good diversification strategy to reduce asset volatility.”

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

GME stock positioned for another short squeeze

Get the full analysis and chart in our Insights. Upgrade to Premium today    

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD retreats to monthly lows around 1.2100 amid pre-Fed jitters

EUR/USD is consolidating its losses around 1.21 as tensions mount ahead of the critical Fed meeting on Wednesday. A belated response to rising inflation boosted the dollar on Friday. Negotiations on infrastructure are also awaited.

EUR/USD News

GBP/USD pressured around 1.4100 amid UK reopening delay

GBP/USD is trading around 1.41, around the lows. UK PM Johnson is set to allow a four-week delay to Britain's reopening. Brexit acrimony and dollar strength also weigh on the currency pair.

GBP/USD News

XAU/USD slides below $1,850 level, fresh one-month lows

 Gold continued losing ground through the mid-European session and dropped to fresh one-month lows, below the $1,850 level in the last hour.

Gold News

Four reasons why XRP price could set new-all time high above $5

XRP price experienced a significant bull run as it rallied roughly 750% since 2021. However, due to the recent correction, Ripple’s year-to-date (YTD)

Read more

Fed balance sheet hits record high and equities follow suit

Another week another record high for stocks as equity markets power on. The theme of 2021 is back on track as yet another record high strengthens the series of records that 2021 has so far chalked up.

Read more

Forex MAJORS

Cryptocurrencies

Signatures