Gold: Pullback risk with higher yields and Oil – OCBC

OCBC’s Sim Moh Siong and Christopher Wong note that Gold’s rebound has lost momentum as renewed Oil gains and higher long-end US yields revive inflation concerns. Daily charts show fading bullish momentum and a lower Relative Strength Index (RSI) from near overbought levels. The strategist sees scope for near-term consolidation or pullback unless yields stabilise or investment demand improves, which would be needed for the Gold rally to regain traction.

Rebound stalls as yields stay elevated

"Gold’s rebound has lost some momentum as the renewed rise in oil prices added to pressure from higher long-end US yields."

"Firmer crude has brought inflation risks back into focus, helping keep longer-dated Treasury yields elevated even as markets pared back near-term Fed hike expectations."

"The USD was comparatively steady, offering little additional support. This leaves gold caught between a more supportive Fed backdrop and renewed pressure from oil and yields."

"For the gold rally to regain traction, oil and yields need to stabilise, or a stronger pickup from investment demand."

"Gold last seen at 4365 levels. Bullish momentum on daily chart intact but shows tentative signs of fading while RSI turned lower from near overbought conditions. Near term, some consolidation or a pullback remains possible."