Gold’s Best Friend Is Back: Falling Yields Reload the $4,300 Bull Case

Usually, gold prices rise when the US 10-year Treasury yield declines below important levels since the opportunity cost of holding non-interest-bearing gold lowers. Lower yields render gold more appealing as both a haven and an inflation hedge, especially when paired with expectations for Fed rate decreases and a depreciating US dollar. Though geopolitical events or sudden swings in inflation expectations might produce exceptions, this opposite link is most obvious when actual yields fall. Even while short-term variations may happen during times of financial or economic crisis, the fall in Treasury yields remains a major element favoring higher gold prices.

Gold cut some of its gains on the softening of the Fed rate. Presently at roughly $4033, it fell to an intraday low of $4021.

Near-term support - $4000. Any breach below will drag the yellow metal down to $3960/$3934/$3895/$3800/$3770/$3500.

Significant resistance - $4050. Any violation above this level will push the commodity to $4065/$4100/$4155.

It is good to buy on dips around $4058-60 with SL around $3985 for a TP of $4300.