The price of gold can rise when long rates fall

The next economic data will be decisive for the price of gold

The price of gold may regain the upper hand in the near term as it returns to test key support at $1730 and bond yields may continue to fall. Long-term interest rates have been falling since the end of October and may continue in this direction in the coming months due to the growing fear of recession. In fact, the risk of a global recession continues to rise with the real estate crisis and the expansion of health restrictions in China, the energy crisis in Europe and the tightening of financial conditions around the world.

Upcoming inflation and growth data will be decisive for the price of gold. Paradoxically, despite its inflation protection, the price of gold would be affected by higher-than-expected inflation numbers, as they would increase the chances of even more aggressive Fed tightening. However, the price of gold may benefit from the deterioration of fundamentals, the growing risk of recession would push investors back into the bond market, which would lower bond yields and increase the chances of a “pivot” by the Fed. .

Upcoming speeches from Fed members will also be one to watch, but none of them are likely to cause a major move in the markets until Powell speaks at the Brookings Institute on November 30.

Gold Price Daily Chart – Key Levels


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