Gold continues to consolidate as the outlook for yields and the dollar has become less decisive in recent sessions. However, technicals on gold remain strong for further upside. Furthermore, the expectation of subdued yields and further dollar weakness should help to ensure weakness remains a chance to buy for additional gains in the coming weeks.
The breakout on gold has hit the buffers in recent sessions. It comes as Treasury yields have settled a shade above a key floor around 0.54%/0.60% on the US 10 year. This is taking some of the wind out of the sails of the bull run on gold. A six week downtrend on the 10 year Treasury yield is beginning to creak, and this plays into the trend breach on gold and recent price consolidation too.
Unless there is a huge economic deterioration, yields are unlikely to move sharply lower from here. Despite this, the chatter about the Fed about controlling the yield curve is also anchoring yields around these levels. This could mean that whilst gold retains a positive outlook, the move higher could become less certain and more prone to near term shocks. We would still see any near term price shocks (i.e. weakness) as a chance to buy.
The other key driver of gold remains the dollar. The Dollar Index is pressuring the 95.70 key support but so far is yet to breac