Gold has been contained in a sideways range from March, with reduced sensitivity to the USD, which has steadily appreciated from May. Strategists at Credit Suisse are on high alert for a potentially significant top in XAU/USD, which would open up the $1,565/61 zone.
Rising US Real Yields seen as a major negative driver for gold
“Whilst we believe further USD strength will be a headwind for gold, a key driver for remains US Real Yields. Our base case remains that US Real Yields are in the process of establishing yield bases and with rising Real Yields seen as a major negative driver for the yellow metal, we remain on high alert for a potentially significant top and breakdown in XAU/USD.”
“Below support at $1,759/54 is needed to clear the way for a retest of major support at $1,691/77 – the key lows for the year from March, April and August.”
“A break below $1,691/77 would see a large top and also a bearish ‘triangle’ continuation pattern established to mark a significant change of trend lower. If confirmed, we would expect this to act as the catalyst for a fall to the 50% retracement and 200-week average at $1,565/61 initially.”
“Whilst we would expect the $1,565/61 zone to hold at first, big picture, we would see scope for an eventual fall to $1,452/40.”