By: Fawad Razaqzada, Market Analyst
Gold is stabilizing as softer Federal Reserve interest rate expectations offer support, but elevated bond yields continue to restrain its recovery. Lower oil prices and continued central bank buying have also helped gold withstand pressure from a stronger U.S. dollar. The tension leaves gold with an improving fundamental backdrop but a daily technical trend that has not turned bullish.
Fawad Razaqzada, StoneX Media Market Analyst, has more than 12 years of trading and analysis experience across foreign exchange, indices, commodities and cryptocurrencies. His coverage combines macroeconomics, technical analysis and price action, connecting gold’s interest rate and inflation drivers with its chart structure.
Elevated bond yields continue to restrain gold despite a repricing of Federal Reserve interest rate expectations that has helped the metal stabilize. Weaker-than-expected employment data and dovish-leaning comments from Federal Reserve officials have provided gold with some policy-related support. Gold’s technical structure nevertheless remains bearish, with lower highs and lower lows still in place. "But on a daily chart the trend is still clearly bearish." Razaqzada says, distinguishing gold’s bounce from a confirmed reversal.
"Higher oil prices would put upward pressure on inflation and keep bond yields elevated, which could potentially hold the precious metal back", according to Razaqzada. Gold’s sensitivity to oil therefore extends beyond geopolitical uncertainty to inflation and interest rate expectations. A breakthrough in U.S.-Iran talks could push oil prices lower, easing inflation and reinforcing expectations of lower U.S. interest rates, a combination that could support gold. Renewed tensions could instead raise oil prices and maintain the yield pressure restraining gold’s recovery.
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Fawad Razaqzada, StoneX Media Market Analyst
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Softer interest rate expectations are helping gold stabilize, but elevated bond yields continue to restrain its recovery. Oil-driven inflation risks help explain why fundamental support has not yet translated into a bullish technical reversal.
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