XAU/USD hit a high of $1950/oz at the start of last week, yet ended the week at $1850/oz. Rising Treasury yields could continue to pressure gold lower this week but strategists at OCBC Bank are not convinced yields should be trading at current levels in such a macro environment.
“We remain unconvinced that TYs should be trading at such elevated levels and expect monetary intervention from the Fed should this persist, possibly in the form of a WAM extension in its QE program.”
“We see gold as undervalued at this stage and suggest a buy-on-dips strategy.”
“Consider entry at $1820; take profit at $1920; stop loss at $1780.”
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