In contrast, inflation expectations have remained stable, which explains the sideways movements gold has been experiencing recently.
Analysts believe that the real yield is the main determinant of gold’s movement at the moment. When these yields rise, bonds and yield-generating assets become more attractive, reducing the luster of gold. When they fall, investors turn to the yellow metal as a store of value. Historically, every 0.5 percentage point decrease in the real yield has led to a significant increase in gold prices, which is the same pattern we have seen this year.
The available possibilities are clear: If real yields decline slightly or the Federal Reserve signals a rate cut, gold prices may exceed the “$4200” level and perhaps reach “$4300”. However, if strong US economic data is released and yields continue to rise, the metal may fall to the “$3800–3900” range.
