Gold has sold off steadily for two weeks and today broke through the June lows to the worst levels since March 14.
Gold daily
The gold move is a mirror image of Treasury yields as the risk-free rate for 10-years in the US nears cycle highs at 4.30% while gold continues to yield 0%. That’s a powerful difference for investors and treasury managers with long investment horizons.
The strength in the US dollar is also a headwind for gold but does raise its attractiveness in other currencies.
Technically though, today’s break of the June lows makes it more likely we retrace the entire March move, which was predicated on the bank rout and belief the Fed was near a peak. Given strong US data, the timeline for Fed cuts is being pushed out and rising oil prices are also boosting the outlook for inflation. I would expect to see strong buying in the $1820-$1830 range but not before. If anything, we could be closing in on an ugly breakdown.