FXStreet notes that the gold price has risen by nearly 20% this year, as real yields have fallen. Strategists at Capital Economics have become more positive on the outlook for the yellow metal price as they think the backdrop will remain supportive, limiting any downside, even if some of the steam comes out of the gold price rally next year.

“We have raised our forecast for the gold price, as we expect real yields to drift a little lower and remain low for some time. We now think that the price of gold will finish the year at $1,900 per ounce ($1,600 previously) and will remain elevated over the next couple of years.”

“In the near-term, we reckon that inflation breakevens will drift higher, back to pre-pandemic levels, as economies recover from their lockdown-induced slumps. And although we expect nominal 10-year Treasury yields to inch up too, they will not rise by as much. The net effect of these moves will be to drag real yields lower by end-2020. As a result, we expect the gold price to push a little higher by year-end. This view is supported by our forecast that the US dollar will weaken in the second half of 2020.”

“We think there could be clusters of investors – concerned about the potential for runaway inflation owing to ultra-loose monetary policy – who will seek refuge in the gold market. In the near-term, weak demand should hold back the inflationary effects of supply constraints and policy stimulus. And in the medium-term, we think that firms are more likely to shore up their balance sheets than embark on an inflationary spending spree. As such, demand for inflation hedges should fade.”

FXStreet notes that September Crude Oil futures have continued their impressive price rebound reaching four and a half month highs this week as have nearly doubled from the lows climbing above the $40 mark. The EU stimulus package and a weaker USD have lent support to the black gold. Technically, September WTI contract (CLU20) faces first resistance at the $44.41 200-DMA, per Charles Schwab.

“A number of factors have contributed to the bull camp confidence. First, Crude has seen a boost as the U.S. Dollar has continued its tailspin dropping to 4-month lows this week. In addition, the EU concluded a 4-day meeting earlier this week passing a 750 billion-euro stimulus package.” 

“The gap created by the early March price plunge was filled at the 42.50 level Tuesday. Next resistance is waiting at the 200-day moving average crossing today at the 44.41 mark today. Beyond the 48.97 level offers the next resistance.” 

“Pullbacks will find support at Monday’s 39.97 low, followed by the 38.77 and 37.32 marks. Longer-term support comes in at the bottom of the current $7 wide channel established since the end of May at the $35 mark.”

“The 14-day RSI is sitting at 61 and bears watching for overbought conditions developing.”