Gold Price Forecast: XAUUSD to sustain a downtrend if central banks keep rates elevated– TDS

Gold is benefiting from rising recession odds. However, if central banks keep rates elevated to combat high inflation, the yellow metal could struggle to sustain an uptrend, strategists at TD Securities report.

XAUUSD needs to hold onto $1,780 to sustain an uptrend by year-end

“Gold prices are struggling to hold onto the critical threshold near $1,780 required to sustain an uptrend by year-end.” 

“Trend signals in the yellow metal clash with those in industrial precious metals, which trade well below the threshold for an uptrend to form with price action most consistent with a strengthening downtrend. This divergence in the face of the most hawkish central bank regime since the 1980s reflects growing odds of a recession, supporting the yellow metal, as traders anticipate a pivot in policy.” 

“In this cycle, however, a sustained downtrend could form in gold if central banks, facing a credibility crisis, remain committed to their battle against inflation and keep rates elevated for longer than they otherwise would.”