According to OCBC strategists Sim Moh Siong and Christopher Wong, gold's recent rebound has lost momentum due to renewed gains in oil prices and higher long-end US Treasury yields, which have revived inflation concerns [1]. The daily charts indicate that bullish momentum for gold is fading, with the Relative Strength Index (RSI) turning lower from near overbought levels [1]. Gold was last seen at 4365 levels [1].
The strategists note that firmer crude oil prices have brought inflation risks back into focus, contributing to elevated longer-dated Treasury yields, even as markets have reduced expectations for near-term Federal Reserve rate hikes [1]. The US dollar has remained comparatively steady, providing little additional support for gold [1]. As a result, gold is currently caught between a more supportive Fed backdrop and renewed pressure from oil and yields [1].
OCBC suggests that for the gold rally to regain traction, either oil and yields need to stabilize or there must be a stronger pickup in investment demand [1]. In the near term, the analysts see scope for consolidation or a pullback in gold prices unless these conditions are met [1].
CONCLUSION
Gold's upward momentum has stalled as higher oil prices and US yields revive inflation concerns, leading OCBC to warn of a potential near-term pullback. The market remains in a wait-and-see mode, with stabilization in yields or increased investment demand needed for the gold rally to resume.