RBC note that “the dollar, real yields and inflation expectations are in the driver’s seat at the moment. We have long talked about what we perceive as the tug of war going on in gold between the long-term macro relationships that mostly point to lower prices versus the perceived safe haven/store of value trade. The aforementioned macro factors have some more complicated connective tissue between them, but overall the macro story is winning at the moment. Absent or until a significant recession occurs, the macro trends will continue to hold gold back on most days in our view. Our forecast for Q3 is $1,679/oz, and gold is just north of $1,700/oz in the wake of the ECB rate hike of 50 bps. That said, gold tends to be a shock-driven asset and headlines matter. While our base case remains our middle scenario, we maintain that our high scenario cannot be written off in the world of shocks and risks we live in.”
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