Saxo’s framing turns the usual gold playbook on its head, arguing that persistently high long-end Treasury yields, normally bullion’s biggest headwind, may increasingly reflect fiscal and term premium concerns rather than growth or policy tightening, which would weaken the historically negative gold-yield relationship rather than reinforce it. That reframing matters because it is the one genuine outlier in an otherwise supportive setup: fading Fed hike expectations, a rolling-over dollar, returning ETF demand, and steady central bank buying are all pulling in gold’s favour, leaving bond yields as the sole holdout. The $4,500 level, where the 200-day moving average sits, is flagged as the technical line in the sand, with a sustained break seen encouraging further momentum and ETF demand, while a slip back below $4,200 would point to continued consolidation rather than a fresh bull leg. Saxo’s own risk case, a renewed inflation or employment surprise reviving both real yields and the dollar together, remains the scenario most likely to unwind the recent rebound.
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Earlier:
- ICYMI: Wells Fargo cuts 2026 gold target to $4,900-5,100, still bullish overall
- Gold nears $4,500 resistance as central bank buying meets fading Fed hike bets
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Saxo thinks gold has quietly turned bond market anxiety into a tailwind instead of a headwind, with everything except yields now pointing the same supportive direction.
Summary:
- Saxo Bank’s Ole Hansen says gold is holding near $4,400 after breaking higher from a consolidation phase that found support just below $4,000
- Fading Fed rate hike expectations, a softening dollar, and returning investment demand are supporting the rebound, while elevated long-end bond yields remain the key headwind
- Goldman Sachs chief economist Jan Hatzius called a September hike very unlikely, aligning with Saxo’s own long-held view on Fed tightening
- The Bloomberg Dollar Index has begun rolling over after earlier strength, reinforcing the usual weaker-dollar, higher-gold relationship
- Long-dated Treasury yields remain near multi-year highs despite softer data, which Saxo attributes partly to fiscal and term risk premium rather than growth or policy expectations, with CBO-projected net federal interest costs exceeding $1 trillion in 2026
- AI hyperscaler debt issuance is adding further upward pressure on yields by competing with Treasuries for capital
- Global gold ETFs added roughly 23 tonnes and $3 billion in July after two months of outflows, with COMEX speculative net longs at a January high and an 11-month high among hedge funds specifically
- Central bank demand remains strong, with second-quarter purchases estimated at 289 tonnes
- The $4,500 area, where the 200-day moving average sits, is flagged as the next major technical hurdle, with $4,200 as the level below which the market would signal continued consolidation
- Key risks include a reversal in Fed rate expectations reviving real yields and the dollar together, and a failure of the current technical breakout given the momentum-driven nature of part of the rally
Gold is holding firm near $4,400 an ounce, according to Saxo Bank, as fading Federal Reserve rate hike expectations, a softening dollar and returning investment demand outweigh elevated bond yields, the market’s main remaining headwind. Ole Hansen, the bank’s head of commodity strategy, said the metal has broken higher from a week-long consolidation phase that found support just below $4,000.
The interest rate backdrop has shifted clearly in gold’s favour. Softer US employment, inflation and consumer data, including a 0.6% drop in July retail sales, the first decline in nine months, have reduced pressure on the Fed to tighten further. Goldman Sachs chief economist Jan Hatzius recently called a September hike very unlikely, a view Hansen says aligns with Saxo’s own long-held position that the Fed will struggle to raise rates further from here. The dollar has added a second tailwind, with the Bloomberg Dollar Index beginning to roll over after its earlier strength this year.
Bond yields remain the exception. Long-dated Treasury yields are sitting close to multi-year highs despite the softer data, which Hansen attributes partly to a rising fiscal and term risk premium rather than growth or policy expectations, pointing to Congressional Budget Office projections that net federal interest costs will exceed $1 trillion in 2026. Debt issuance from AI hyperscalers funding infrastructure buildouts is compounding the pressure, competing directly with Treasuries for capital. Hansen argues this dynamic could work in gold’s favour over time, weakening the metal’s traditional negative relationship with yields if elevated rates increasingly reflect fiscal concern rather than economic strength.
Investment demand is recovering alongside the shift in macro drivers. Global gold ETFs added around 23 tonnes and $3 billion in July, the first inflow after two consecutive months of outflows, while COMEX speculative net longs have climbed to a January high, an 11-month high among hedge funds specifically. Central bank buying remains a steady undercurrent, with second-quarter purchases estimated at 289 tonnes, a dynamic Hansen compares to 2022-23, when strong official-sector demand helped prevent the deep correction many expected despite aggressive rate hikes at the time.
Hansen flags $4,500, where the 200-day moving average sits, as the next key technical test, with a sustained break above that level likely to draw further momentum and ETF demand. A drop back below $4,200, by contrast, would suggest the market remains in consolidation rather than starting a fresh bull leg. The clearest risk to the outlook is a renewed acceleration in inflation or employment data reviving both real yields and the dollar together, a combination Hansen describes as the most challenging macro backdrop gold could face from here.
This article was written by Eamonn Sheridan at investinglive.com.