Gold Price Forecast: Fiscal Deficits Keep Gold Attractive in Real Terms
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Key Points:
- Gold has rebounded from key support as fiscal deficits, sticky inflation, and energy costs keep the long-term bullish case intact.
- The S&P 500-to-gold ratio has broken down, showing that gold continues to preserve real value better than stocks.
- A stronger recovery would support bullish momentum, while a deeper breakdown could extend the correction.
Gold (XAU) prices have bounced off the $4,400 to $4,500 support area as renewed fiscal support, elevated energy prices and stagflation fears continue to underpin a long-term bullish argument. I believe this retracement is more likely to be a consolidation of strong upward trend than a reversal. This article discusses how fiscal deficits, the S&P 500-gold ratio and technical levels could determine whether gold rebounds to $5,000 or tests the $4,270 to $4,000 support zone.