New Delhi [India], July 28 : Gold prices are entering a crucial phase after a subdued week of trading, however, the pause is likely to be a temporary breather within the broader downtrend as rising US real and bond yields, along with a strengthening US dollar, continue to weigh on bullion, says World Gold Council.
As per the report, the yellow metal has witnessed a relatively quiet week with the market extending its consolidation above the USD 3,943/oz June low.
At the same time, the US real yields have seen a further sharp move higher with the 10-year US TIPs yield threatening to exceed its 2025 high at 2.44 per cent as markets have brought forward expectations for the next Fed hike.
"A sustained break above that level would signal that the core trend has shifted from sideways to higher, which we suspect would have negative implications for equity markets and would likely weigh on gold too," it said.
Gold rebounded last week, with the London Bullion Market Association (LBMA) gold price Post-Meridiem (PM) surging 1.8 per cent w/w to USD 4,067/oz, reclaiming the USD 4,000/oz level -- recovering its y-t-d decline to 6.9 per cent. "Dip-buying helped support gold as it held above US$4,000/oz despite higher yields and a stronger dollar," it said.
"From a technical perspective, last week's bounce may just be a temporary breather in gold's downtrend that has been in place from January - with the next key technical support at US$3,857-3,887/oz," it noted.
At the time of reporting, the yellow metal was trading at around USD 4,048.98.
As per World Gold Council, there are high expectations from US Federal Reserve to keep interest rates unchanged this week. However, any hawkish signals from the Federal Open Market Committee (FOMC) during Wednesday's press conference, or an upside surprise in Thursday's Personal Consumption Expenditures (PCE) inflation data, could renew downward pressure on gold by pushing up Treasury yields and strengthening the US dollar, the report noted.