Weekly Fundamental Gold Price Forecast: Neutral
- Rising inflation expectations and falling long-end bond yields have given a new shine to gold prices[1].
- If real yields – nominal yields less inflation – continue to fall, gold prices will likely continue their rally.
- The IG Client Sentiment Index[2]suggests that gold prices in USD[3]-terms (XAU/USD) have a bearish trading bias.
Gold Prices Week in Review
It was a great week for gold prices across the board. Every single gold-cross gained at least +3%, but for one – gold in USD-terms (XAU/USD), which added +2.57%. The top performing gold-cross was gold in EUR[4]-terms (XAU/EUR), which added +3.72%, while gold in AUD[5]-terms (XAU/AUD) and gold in NZD[6]-terms (XAU/NZD) were not far behind, adding +3.60% and +3.66%, respectively.
The bulk of gains emerged mid-week after the October US inflation report (CPI), which showed the highest price pressures in the United States since 1990. Gold’s gains came as rising realized inflation readings were met with a corresponding jump in inflation expectations, which outpaced nominal long-end yields, curating an environment of falling real yields. If US real yields stay near record lows, gold prices may still be able to tack on further gains in the coming sessions.
Economic Calendar Week Ahead
The turn through the ides of November will see several more inflation reports due from G10 economies, which may provide another boost for gold prices in the middle of the week. Speeches from various European Central Bank and Federal Reserve policymakers could help determine whether or not gold’s gains stick, insofar as central bankers ignoring the continued rise in inflation pressures could bring about another wave of fresh lows in real yields.
