Gold price forecast: Yields, dollar strength pressure gold

Gold price at 6-month lows on pressure from yields, USD strength 

On Thursday, the price of gold held below $1,880 per ounce, staying close to its lowest levels in over six months. The downward pressure on the commodity can be mostly attributed to a strong U.S. dollar and surging Treasury yields, driven by the expectation of higher interest rates in the foreseeable future. 

In recent days, the greenback reached its highest point in ten months when measured against a basket of other major currencies as part of the U.S. Dollar index (USDX), while the 10-year US Treasury yield has topped its highest levels since 2007. 

Last week, the U.S. Federal Reserve (Fed) decided to keep interest rates unchanged within the 5.25% to 5.5% range but signaled the likelihood of another rate hike by the end of the 2023 and fewer rate cuts than previously anticipated for 2024. 

Neel Kashkari, President of the Minneapolis Fed, also stated on Tuesday that there's approximately a 50-50 chance that interest rates may need to be raised significantly to combat inflation. 

Investors are now eagerly awaiting the release of US GDP and weekly jobless claims data on Thursday, as well as the PCE price index – the Fed’s preferred gauge of inflation – on Friday, hoping for additional insights into the state of the economy. 

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Gold price forecast: XAU pressured in the short term, future upside likely, say analysts 

In a recent comment, strategists at TD Securities said the gold forecast would depend on economic data readings worldwide, and highlighted the commodity’s resilience in the face of pressure from U.S. Treasury bond yields: 
 
 

In their outlook for the yellow metal, economists at German lender Commerzbank said the commodity would likely remain under pressure around the $1,900 mark in the short term, with upside potential visible going forward: 

Analysts at Erste Group Research, cited by the FXStreet Insights Team, expected a sideways movement for the gold price in their forecast for the commodity: 

Analysts at Melbourne-based bank ANZ were highly bullish on the gold price, saying it could rise to $2,000 by the end of 2023: 
 

The gold price forecast shared by economic data aggregator TradingEconomics recently saw a bullish revision, seeing the commodity trading at a potential average of $1,947.73 by the end of this quarter. The platform’s 12-month gold projection estimated it to trade at $2,016.05 by the end of September 2024. 

When considering gold and other commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.