Where we are: Gold (COMEX) is currently trading at 4556.5, down -48.9 or -1.06% intraday, after a choppy overnight session spanning 4534.4-4615.2. The move lower accelerates the pullback from recent highs, and places Gold well below Friday’s NY close.
What’s driving it: The primary headwind for gold continues to be the rise in US real yields. 10-year TIPS yields climbed 5bp as of Friday, reaching 2.18%, and the trend remains upward, diminishing gold’s appeal as a store of value. While breakeven inflation expectations are also slightly higher, up 1bp to 2.4% as of Friday, the real yield rise is dominating the narrative. Renewed US-Iran tensions are clouding the interest rate outlook according to some wires, but so far any geopolitical safety bid is being overwhelmed by the macro picture. The modest net-long positioning in gold (42.1% of OI) suggests limited squeeze potential to the upside.
- US 10Y Real Yields at 2.18% and trending higher.
- Net non-commercial positioning in gold sits at the 6th percentile, suggesting scope for further downside.
- The DXY is firmer at 99.05, applying additional pressure.
NY session focus: The key event for the US session will be the 10:00 ET release of CB Consumer Confidence (forecast 91.9, previous 92.8). Stronger data could fuel further upside in real yields and pressure gold lower, while a miss could provide a temporary reprieve. Key levels to watch are the overnight low of 4534.4 as initial support, and then 4500 as a major psychological level. On the upside, 4600 now acts as immediate resistance. The current trade is short gold against rising real yields. The pain trade is a surprise dovish signal from the Fed and a sharp reversal in US yields, triggering a short squeeze in Gold.