According to OCBC strategists Sim Moh Siong and Christopher Wong, gold prices have declined this week despite ongoing geopolitical tensions, as higher oil prices have shifted market focus toward inflation, real interest rates, and the Federal Reserve's policy trajectory [1]. The strategists note that the recent increase in energy prices risks keeping inflation expectations elevated, which could potentially delay the Federal Reserve's anticipated easing cycle [1].
The article highlights that hawkish repricing in the market has resulted in implied 2026 Fed rate cuts being reduced to just 5 basis points, reflecting diminished expectations for monetary easing [1]. From a technical perspective, OCBC observes a rising wedge pattern forming in gold, which is typically associated with a bearish reversal in the near term. The strategists identify key support levels at 4452 and 4260, suggesting that near-term risks for gold are skewed to the downside [1].
OCBC further comments that for gold to regain stronger upward momentum, markets would likely need to see either a pullback in oil prices or a reduction in geopolitical tensions sufficient to revive dovish expectations for the Fed [1]. Overall, the technical and macroeconomic setup points to downside risks for gold in the immediate future [1].
CONCLUSION
Gold prices are under pressure as rising oil prices and sticky inflation expectations reduce hopes for imminent Fed easing. OCBC strategists see near-term downside risks for gold, with technical patterns and market repricing both pointing to a bearish outlook.