Where we are: Gold (COMEX) currently trades at $4714.0, down $2.1 or -0.04% on the day, holding above overnight lows of $4686.7 but well off the high of $4745.6. The slight weakness comes after a four-week winning streak, although last week saw a 2.5% decline. Gold is softer in Asia after a mixed session, and ahead of the NY open.
What’s driving it: The stalling of US-Iran peace talks is creating persistent uncertainty, supporting oil prices (Goldman hiked their oil price outlook), and thus embedding inflation expectations. This underpins real rates, which remain a headwind for gold. The moderately long speculative positioning in gold, currently at the 25th percentile, doesn’t suggest an immediate squeeze risk, but limits upside if the geopolitical picture worsens. DXY is softer at 98.14 which is a small positive.
- Wire headline: “Gold Steadies as Attempts to Restart US-Iran Peace Talks Falter”.
- Goldman Sachs is warning of a stock market pullback.
- US 10Y Real Yield (TIPS) is at 1.92% (as of Friday), but stable and offering some support.
NY session focus: Focus will be on risk sentiment given the S&P 500’s recent record highs and Goldman’s warning of a pullback. Watch for further developments on the US-Iran front; any escalation would likely drive a flight to safety and boost gold. Key levels to watch are $4680 as initial support and $4750 as the first resistance. A break below $4680 could trigger further selling. The pain trade for gold is a resolution to the US-Iran conflict, triggering a risk-on move and dampening inflation concerns.