Gold could face further weakness as hawkish Fed and AI worries loom
GLD•Gold trades just under $4,000 an ounce, about 25% below its late-February peak. Capital Economics expects it to fall to $3,600 by the end of 2027, citing a hawkish Fed outlook and the risk of an AI equity bubble bursting.
1. Gold retreats
Gold has given back a year of gains and trades just under $4,000 an ounce, about 25% below its late-February peak. Its usual inverse link with 10-year US inflation-protected Treasury yields broke down over the last two months, after a brief dollar dip and steady central bank buying, especially by China, supported prices.
2. Risks to prices
Capital Economics sees the downsides dominating. The firm points to a more hawkish tilt at this week's Federal Reserve meeting, including two policymakers dissenting in favor of tighter policy; its US team forecasts two more rate hikes and sees risks skewed higher. Its markets team forecasts a possible AI equity bubble burst next year, and gold fell alongside tech stocks this week even as bond yields declined. Capital Economics forecasts gold at $3,600 at the end of 2027, below consensus expectations of about $4,600 in the fourth quarter.
