Gold Price Forecast: XAU/USD on the defensive amid rising yields, strong USD and tighter monetary – HSBC
12.08.2022, 07:07

Gold Price Forecast: XAU/USD on the defensive amid rising yields, strong USD and tighter monetary – HSBC

Gold still faces a determined Fed tightening policy and a strong USD. If market sentiment shifts to a 50 bps rate hike as opposed to 75 bps, this may act to limit the near-term downside for the yellow metal, in the view of analysts at HSBC.

Near-term upside for gold is limited

“As the Fed is still committed to raising rates, so as to fight escalating prices, this is negative for gold, especially when the USD looks firm. The outlook for Fed policy and global growth is likely to prove USD supportive over the short to medium term, even though the path to this further USD strengthening over the coming months is unlikely to be a straight line upwards.” 

“The combination of rising yields, strong USD, quantitative tightening and the end of significant fiscal spending in most economies argue against any sustained gold rally over the medium term. However, this may change, if confidence in monetary authorities wanes.” 

“Gold prices are sensitive to real yields (the nominal yield of a bond minus the rate of inflation), notably the US 10-year real yields. A limit on how high the real yield may rise could act to curb the negative impact on gold of tighter monetary policies. Geopolitical risks would also provide some support for gold.”

 

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