ING analysts Warren Patterson and Ewa Manthey report Gold failed to benefit from the equity sell-off and falling US Treasury yields, with spot prices down 2.8% and nearing $4,000/oz. They argue the Gold market is focused on higher Oil prices and their inflation implications, which could reinforce tighter central bank policy while US inflation remains above the 2% target.

Higher energy undermines Gold

“Gold prices failed to benefit from yesterday’s equity sell-off and the significant fall in US Treasury yields, with the 10-year yield falling back below 5%. Instead, gold prices came under pressure.”

“Spot prices fell 2.8% and are nearing $4,000/oz.”

“The gold market appears more focused on higher oil prices and what it could mean for inflation — and ultimately central bank policy.”

“With US inflation still above the central bank’s 2% target, higher energy prices could intensify price pressures and strengthen the case for tighter monetary policy.”