Takeaway

The presenter argues that gold's outlook has turned defensive, with a near-term bias to the downside. The primary headwinds are rising government bond yields, which increase the opportunity cost of holding the non-yielding metal, and a resilient US dollar. The upcoming FOMC meeting is the key risk event; a hawkish tone from the Fed would likely reinforce these bearish drivers.

What the presenter said

• The macro backdrop has become increasingly challenging for gold, which has seen three consecutive weekly declines. [01:04]
• Rising oil prices are keeping inflation concerns alive, putting upward pressure on government bond yields. This increases the opportunity cost of holding gold, which pays no interest. [00:23, 00:35]
• Momentum from gold's August rally has faded, and unless the "dollar debasement" narrative returns, gold and Bitcoin could remain under pressure. [01:15, 00:46]
• The key technical level is the 4,400 resistance; as long as gold remains below this, the presenter believes bears retain control. [02:00]
• While a 25 bps Fed rate hike is priced in, the main focus is on the Fed's forward guidance. Any hints of further hikes or extreme worry about inflation could be dollar-positive and gold-negative. [03:04, 03:16]

Trade ideas

The presenter did not state any specific trade ideas. The market view is that bears have the upper hand while gold trades below the key resistance at 4,400. A sustained break below 4,100 would bring 4,000 and the June low of 3,942 into focus.

Levels and data cited

• Gold Price Levels:
  • Resistance: 4,400 (key), 4,540 (200-day MA), 4,600.
  • Support: 4,100, 4,000, 3,942 (June low).
  • Upside Target (if 4,400 breaks): 4,500.
• Data Cited:
  • US 10-year bond yield: "came close to that 5%" last week.
  • US inflation data: Released on Friday, prompted a "sell-the-news" reaction in gold.

Risks and what would invalidate this

• A hawkish outcome from the upcoming Fed meeting, with policymakers hinting at further rate hikes or expressing extreme worry about inflation.
• Continued strength in the US dollar.
• Continued rise in oil prices and government bond yields.