Gold: Debasement trade over as prices slide – Societe Generale

Societe Generale’s team highlights a sharp reversal in Gold, with prices down 20% year-to-date and over 11% this month, undermining the Dollar debasement narrative. The post-FOMC capitulation in Gold has given way to some relief as US real yields retreat, but the broader June theme remains Dollar resurgence, flatter US curves, and collapsing Oil and Gold prices back towards pre-war levels.

Sharp YTD losses challenge narrative

"Gold -20% YTD, dollar debasement trade over."

"Brent on course for lowest weekly close since 27 February. Dollar consolidates, in breakout territory as debasement trade comes off the rails, gold off 11.7% this month, silver down 25%."

"The post-FOMC capitulation ran into exhaustion yesterday as gold prices found relief and US real 10y rates retreated to 2.16% but the rearranging of the deckchairs across different asset classes was the main theme again this week."

"However, broad dollar strength trumped the breakdown in gold prices below $4,000/oz and Brent to pre-war levels."

"The resurgence in the dollar, flattening in US bond spreads and collapse in oil and gold encapsulate the month of June."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)