The real drag on Gold is real yield (nominal rate less inflation) ...we now have inflationary expectations prompting longer term yields to go higher but no sight of inflation (not yet) , so real yield is going higher.
You can see the above that Gold correlates closely to inverted real yield ( inverted real yield goes lower as real yield goes higher) i.e Gold falls with rising real yield.
A number of market pundits I have been listening to believe yields are moving higher still to year end to circa 1.9pc to above 2pc...but if inflation does not show up, it may well mean that Gold will face a challenging time for months to come but could get very interesting in the 2nd half or towards the tail end of this year, a view that Lyn Alden subscribes.
There is A Place and Time for Everything - so keeping powder dry on PM unless the Fed starts YCC or we see a genuine strong price behaviour in Gold (which requires fund flows into gold).
Think Adam is caught on Gold, but I can understand because most people expecting $1680 to be the lows before a rebound, a rebound that may however not sustain unless it can get beyond $1800 and $1865.
