ANZ: Gold’s Time To Shine

ANZ note that “recent macroeconomic developments have boosted the appeal of gold. In the short term.”

• “Expectations around a U.S. recession are rising, with many indicators showing signs of a slowdown. The inversion of the U.S. yield curve has steepened recently, and historically this has been followed by rate cuts, with a lag of 3-6 months. Such a scenario normally bodes well for higher gold prices.”
• “Our bearish view on the USD remains intact for this year.”
• “Gold ETF flows turned positive in March and speculative net-long positions are rising. Even so, investor holdings are low, leaving room for accumulation, which could offset any weakness in physical demand caused by higher prices.”
• “We reiterate our year-end forecast of US$2,050/oz, however, risks are skewed to the upside in H223.”
• “The turning point for the market could be a pause in U.S. interest rate hikes. While we believe the Federal Reserve is likely to hike another 50bp by June, gold is likely to give up some risk premium in the short term before rising again.”
• “Technically, prices are retracing after approaching the upper resistance level of the trading channel, but we see the channel’s upward momentum continuing until the price breaks below US$1,900/oz.”