Gold continues to bide its time in waiting for the next big move | investingLive

Gold posted a 1% gain on Friday to salvage what was an otherwise lackluster affair in the days before. But despite the gain, the precious metal is not really doing all too much in the bigger picture. As markets are not getting carried away with the Fed rate cut narrative today, we’re seeing a minor pullback to some of the moves on Friday.

So far, gold is down 0.2% on the day to $3,366. However, the technical chart shows how the price action since Friday still leaves a lot to be desired.

Gold has been rangebound since the end of May and buyers are seen defending the 100-day moving average (red line) at least. That continues to keep the more bullish sentiment but the consolidation phase also points to a lack of impetus and momentum to seek the next leg higher.

In other words, gold is very much still biding its time in waiting on the next big move here. And that will come on a breakout of the consolidation phase seen above.

As things stand, a lot will ride on the Fed and what come next as pointed out here. I reckon the spot to watch for gold will be the bond market. A more sanguine flow to things where a soft landing is in place and the Fed gradually cuts is very much what is priced in for gold at the moment. But if the bond market goes kicking and screaming amid higher inflation data, that’s when things get more interesting.

The usual case is that higher rates typically means bad news for gold. However, keep in mind that the thing that will matter most is real rates. So, watching for that inflation tune is going to be equally as important as Treasury yields.