Geopolitical risk and inflation pressure are currently the two primary drivers for the gold market. Strategists at ANZ Bank expect the bright metal to remain supported amid the current market environment.

US 10y yield spikes, reversing curve inversion 

“A recent correction in equity markets reflects fear of slowing economic growth, which supports the move of funds from equity to real assets. A spike in US10y yield saw a reversal of yield curve inversion, but elevated risk is still supporting gold.”

“An aggressive Fed rate hike of 75bp could be a short-term price damper, while elevated inflation due to supply shocks could mitigate the negative impact.” 

“Expectations of more sanctions against Russia are fuelling inflation expectations, thereby raising the stagflation risk. A stronger USD is not a headwind for gold, as the two normally deserted their normal inverse relationship during crisis.”