Gold Price Analysis: XAU/USD to move downward as market focuses on higher yields – OCBC

Strategists at OCBC Bank estimate gold’s fair value range at $1625-$1725. With spot gold currently trading at around $1730, there is scope for XAU/USD to correct downwards. 

Gold is relatively rich compared to the current levels of US 10-year Treasury yield

“We have been highlighting gold’s appeal as an inflationary hedge since the start of the year but the market appears to place that feature as a low priority, preferring to ride along the inflation/reflation theme by piling into risk assets.”

“The mood surrounding Treasury yields has shifted and the market is now looking at how much higher rates can go, which in essence is negative for gold prices.” 

“We turn bearish on gold in the short-term and neutral in the medium to long-term.”

“We see fair value at $1625-$1725 based on current inputs.”