UNITED STATES May 04 2017 11:36 AM
NEW YORK (Scrap Register): Moves in US Treasury yields are likely to be the key driver of gold prices, with safe-haven flows on geopolitical worries tending to only provide temporary support, said Standard Chartered. 

According to the bank, two more Federal Reserve rate hikes this year and two more in 2018. Stronger-than-expected data and hawkish rhetoric are likely to present the low points for gold, but prices have bounced back thereafter in the past.

“On the upside, geopolitical uncertainty has triggered substantial safe-haven flows, sparking gold’s first attempt at $1,300 an ounce. But geopolitical risks tend to stoke temporary fillips in gold, and other drivers need to carry the momentum forward,” analyst at Standard Chartered added.

Standard Chartered believes political uncertainty still has scope to spark additional interest in gold, but the key driver on the macro front will be USTs. 

This is gold’s strongest relationship that has held up well this year. If 10-year UST yields return to 2.60%, gold could trade to USD 1,200 an ounce. Standard Chartered looks for gold to average $1,245 an ounce this year.