Where we are: Spot gold trades near $4,690, consolidating after a slight pullback in European hours. Overnight range has been contained, and the price is just below yesterday’s New York close. Bullion remains below the key $4,700 resistance level, struggling to gain upward traction.
What’s driving it: Rising US real yields continue to exert downward pressure on gold. The 10-year TIPS yield is up 4bp to 1.99%, making the non-yielding precious metal less attractive. While breakeven inflation remains steady, the widening gap between nominal and real yields favors holding bonds over bullion. The lack of progress on trade between the US and China and concerns around the Iran conflict, traditionally supportive for gold, are being overshadowed by the stronger-for-longer narrative in US monetary policy.
- US 10Y Real Yield rising 4bp to 1.99% puts further pressure on gold price.
- Gold discounts in India are breaching $200/ounce as profit-taking accelerates.
- Speculator positioning in gold remains modestly long, but not at an extreme, minimizing the risk of a short squeeze.
NY session focus: All eyes are on the 08:30 ET release of US Retail Sales and Unemployment Claims. Strong prints could reinforce the hawkish Fed outlook and trigger another leg higher in real yields, pushing gold lower. Key levels to watch are $4,675 as initial support and $4,700 as immediate resistance. The trade that’s working is shorting gold on rallies, while the trade at risk is expecting a significant bounce without a dovish surprise from the data. The pain trade would be a weaker-than-expected Retail Sales number, prompting a real-yield correction and a short-covering rally in gold.