Gold to continue drawing strength from negative US real yields


  • Negative US 10-year real yields power gains in gold. 
  • The yellow metal is a hedge against inflation.

Gold, a zero-yielding safe-haven metal, has gained 17% so far this year. 

The negative real or inflation-adjusted US Treasury yields seem to have power gains in the yellow metal and could continue to support the uptrend in the near term, according to Holger Zschapitz, senior editor at the economic and financial desk of the German daily Die Welt. 

As seen above, gold has rallied from $1,450 to $1,789 over the past three months, while the US 10-year real rates have declined from 0.60% to -0.73%. Negative real yields essentially represent inflation or a decline in purchasing power and gold is a hedge against inflation.

Real rates could slide further, as the Federal Reserve is unlikely to halt treasury purchases anytime soon. As such, gold could continue to gain altitude and may test the $2,000 mark in the next 12 months, as forecasted by Goldman Sachs. 

At press time, gold is trading at $1,775, representing a 0.10% gain on the day. Price hit an eight-year high of $1,789.15 on July 1. 

Technical levels

XAU/USD

Overview
Today last price 1775.76
Today Daily Change 0.43
Today Daily Change % 0.10
Today daily open 1776.19
 
Trends
Daily SMA20 1747.5
Daily SMA50 1728.5
Daily SMA100 1678.16
Daily SMA200 1593.25
 
Levels
Previous Daily High 1777.21
Previous Daily Low 1772.76
Previous Weekly High 1789.28
Previous Weekly Low 1757.7
Previous Monthly High 1785.91
Previous Monthly Low 1670.76
Daily Fibonacci 38.2% 1775.51
Daily Fibonacci 61.8% 1774.46
Daily Pivot Point S1 1773.56
Daily Pivot Point S2 1770.94
Daily Pivot Point S3 1769.11
Daily Pivot Point R1 1778.01
Daily Pivot Point R2 1779.84
Daily Pivot Point R3 1782.46

 

 

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