Gold Price Forecast: Risk-On Signals Clash with Stock Valuations
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Key Points:
- Gold remains supported even as risk-on signals reduce recession fears, because weak real-economy data keeps hedge demand alive.
- Extreme stock valuations continue to support gold demand as investors seek protection against earnings risk, policy, and market repricing.
- Gold’s bullish structure remains intact as long as key support holds, with hedge demand likely to strengthen if stocks lose momentum.
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Gold (XAU) price remains supported despite several macro signals suggesting risk-on. The yield curve has turned positive, S&P 500 remains above the long-term trend and the Fed has not delivered another rate cut for more than 180 days. These signals reduce the immediate recession fears and support the risk assets. But this does not remove the case for gold. The equity valuations remain extremely stretched, while some real economy indicators still show weakness. This results in a mixed market backdrop. Investors can use gold as safe haven to guard against valuation risk, policy errors and a shift in risk sentiment.