Gold: Tentative stabilisation on oil relief – OCBC

OCBC strategists Christopher Wong and Sim Moh Siong highlight that Gold has rebounded as Oil prices eased, reducing inflation and Fed tightening concerns, while a softer US Dollar also supported the move. However, ETF holdings remain lower month-to-date, suggesting the recovery is more relief-driven than a decisive return of investor demand. Near term, Gold could trade with a better tone if Oil and yields stay contained.

Relief-driven recovery in Gold

"Gold. Tentative stabilisation on oil relief. Gold rebounded as oil prices eased from their recent spike, taking some pressure off inflation expectations, yields and Fed tightening concerns. A softer USD also helped the recovery, after the recent selloff across the precious metals complex."

"But ETF flows have yet to confirm a broader investor rebuild. Bloomberg data show total known gold ETF holdings remain lower month-to-date, even though holdings have stabilised slightly in recent days. This suggests the move is still mainly about relief from oil and yield pressures, rather than a decisive return of investor demand."

"That said, the structural support remains intact. Central banks continue to add to gold reserves, with Poland standing out as a notable buyer this year. Governor Glapinski said that Poland has bought 82t of gold this year and now holds 632.4t."

"The target is to accumulate 700t of gold. Near term, gold can trade with a better tone if oil stays contained and yields remain capped, but stronger follow-through likely requires softer US data or a further easing in Fed tightening concerns. Gold last seen at 4125 levels."

"Mild bullish momentum on daily chart intact while RSI rose. Risks skewed to the upside for now. Resistance at 4140 (21 DMA), 4200 levels. Support at 4021 (week’s low), 3943 (year’s low)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)