Gold Q3 Fundamental Forecast

1. Gold Q3 Fundamental Forecast:
Outlook Deteriorates For Gold Prices

2. Points To Be Covered Today:
• Q3 Gold Forecast Overview
• Rising Us Real Yields Are Problematic
• Gold Prices Rebound As The US Dollar And Yields Fall After Strong
NFP
• Gold Technical Analysis
• Gold Weekly Chart
• Gold News & Analysis

3. Q3 Gold Forecast Overview
• Shifts in the US Treasury yield curve, on balance, suggesting a period with
stronger short- and intermediate-term rates, has been consistent with a
stronger US Dollar and weaker gold prices.
• The expectation that the combination of loose monetary policy and
expansionary fiscal policy will soon end has started to strengthen, for two
main reasons.
• Over the past five years, gains by US real yields have been generally
correlated with losses by gold prices.

4. Rising Us Real Yields Are Problematic
• It’s been said before, but it’s more important now than in months past.
• It’s important to view recent price action across asset classes through the lens
of asset allocation and risk-adjusted returns.
• Gold, like other precious metals, does not have a dividend, yield, or coupon,
thus rising US yields – importantly, real yields – are problematic.

5. Gold Futures Versus Us Treasury Nominal, Real Yields And Us Breakevens (June 2016
To June 2021)

6. Change In Gold Futures (%) Versus Change In Us 10-year Yield (Real)
(Bps) (June 2016 To June 2021)

7. Gold Prices Rebound As The US Dollar
And Yields Fall After Strong NFP
• Gold prices traded modestly higher during Monday’s APAC session, as a weaker US Dollar and lower yields
bolstered the appeal of the yellow metal.
• Prices continued to consolidate in a tight range between $1,750 - $1,795 waiting for fresh catalysts.
• The DXY US Dollar index pulled away from a 3-month high and Treasury yields retreated across the curve -
both are exerting upward pressure on gold. The closure of US markets on Monday may thin out trading
volume however.
• US nonfarm payrolls beat market expectations on the upside, with hiring accelerating in June as labor
market supply constraints eased.
• 850k new jobs added, marking the highest reading in 10 months (chart below). Average hourly
earnings rose 0.3% MoM and 3.6% YoY, reflecting strong demand for labor.
• An upbeat payrolls figure strengthened the prospects for the US economic recovery, yet the pace of job
growth didn’t appear to have reached a level that would prompt the Fed to tighten quickly.
• This created an ideal backdrop for gold to recover some losses and attempt a near-term breakout.

8. US Nonfarm Payrolls – Past 12 Months

9. Gold Technical Analysis
• Technically, gold prices are consolidating in a tight range between $1,750 -
$1,795 as shown on the chart below.
• The overall trend remains bearish-biased after prices breached below the
floor of the “Ascending Channel” in mid-June.
• An immediate support level can be found at $1,750 – the 78.6% Fibonacci
retracement.
• The MACD indicator is about to form a bullish crossover and trended lower,
suggesting that near-term selling pressure may be fading.

10. Gold Price – Daily Chart

11. Gold Technical Outlook Took A Big Hit
• For quite some time, despite not making any headway, gold still looked poised for
higher prices, but that outlook recently took a big hit at the June Fed meeting.
• The one-week decline of 6% in June was the largest 5-day loss since markets
freaked out in March 2020.
• There is a slope that could become pivotal in the coming period, rising up from May
2019.
• If that can’t keep the price buoyed, then XAU/USD may be looking to support right
around the 1675 level.
• There was some play on this as resistance around the time Covid hit markets and
then not long after as support. It also put a floor in twice in March.

12. Gold Technical Outlook Took A Big Hit - I
• Stabilizing around one of the aforementioned areas of support will be a starter for
gold to possibly keep its longer-term trend intact, but there will still be much work to
be done before it can embark on another bull market leg.
• Another potential scenario is that we see horizontal support, and the trendline off of
the summer 2020 high, keep prices confined and wedging towards the apex of a
triangle pattern.
• This will likely take a while to form, but something to keep on our minds as we
progress through the back half of the year.
• For the next quarter, the technical outlook doesn’t appear set to offer any real clean
looks, so we might need to be patient before establishing a firmer intermediate-term
trading bias.

13. Gold Weekly Chart

14. Gold News & Analysis
• Gold struggles to extend three-day run-up, picks up bids of late.
• Risk appetite sours as traders await Fed minutes to confirm reduction in rate
hike bets.
• CFTC data shows reduction in gold buying, covid woes also probe the bulls.
• US holiday, light calendar elsewhere signal subdued markets ahead.
• Source:
• Gold Price Forecast: XAU/USD clings to small daily gains near $1,790
in choppy day (fxstreet.com)

15. Gold Technical Overview

16. Gold Technical Overview - I
• Gold price is gathering strength to take Friday’s high of $1795, above which the confluence of the SMA100
four-hour and pivot point one-day R1 at $1797 will challenge the bullish commitments en-route $1800.
• Acceptance above $1800 could trigger a quick advance towards the pivot point one-week R, which is aligned
at $1805.
• The next powerful upside barrier for gold price awaits at $1813, the Fibonacci 38.2% one-month.
• Meanwhile, a failure to sustain above Friday’s high could reinforce bearish sentiment, opening floors towards
strong resistance-turned-support at $1789, where the SMA100 one-day coincides with the Fibonacci 23.6%
one-day and one-month.
• Sellers will then target $1785, which is the convergence of the previous low four-hour and Fibonacci 23.6%
one-week.
• The Fibonacci 61.8% support at $1782 could then come into play.
• The line in the sand for gold bulls is seen around $1776, which is a dense cluster of healthy support levels
comprising of SMA10 one-day, SMA50 four-hour and Fibonacci 38.2% one-week.

17. Gold Fundamental Overview
• Gold price catches a fresh bid and retests the two-week highs at $1795 on Monday,
drawing support from the renewed weakness in the US dollar across the board.
• The greenback resumes its post-NFP downside after a brief rebound earlier on, in
response to weaker Chinese Caixin Services PMI and persisting Delta covid strain worries.
• However, the dollar’s recovery appears to have faltered amid holiday-thinned market
conditions while investors reassess the odds of the Fed’s hawkish policy action after the
US payrolls outpaced expectations by 150K last month, with the Unemployment ticking
higher to 5.9%.
• Gold bulls need a decisive break above the $1795 supply zone to flex their muscles above
$1800 and beyond.
• The US ISM Services PMI and FOMC minutes remain in focus, as a new week kicks off.

18. Gold Fundamental Overview - I

19. Gold Price In US Dollars

20. Gold Q3 Fundamental Forecast:
Outlook Deteriorates For Gold Prices

21. THANKS FOR LISTENING
Gold Q3 Fundamental Forecast:
Outlook Deteriorates For Gold Prices