Gold Retreats to Consolidation, Downside Bias as Inflation Cools and Fiscal Optics Improve

It attributes this shift to several macroeconomic factors, including falling global inflation expectations, particularly in the US where 5-year breakeven inflation has dropped from 2.59% to 2.42%. The analysis highlights rising real yields and improved fiscal optics in the US, with the deficit-to-GDP ratio improving from 7.2% to 5.3%, as well as eased fiscal concerns in Japan.

Additionally, constructive geopolitical developments and reduced concerns about Federal Reserve independence following the appointment of Kevin Walsh as Fed Chair are cited as factors diminishing the 'debasement trade' narrative that previously supported gold. The article concludes that gold is likely to remain range-bound with a slight downside bias in the near term, absent new macro catalysts.