Despite a 5% drop from its May peak, gold’s outlook remains positive according to market indicators. The steepening futures curve shows traders expect higher prices ahead. The decline appears largely connected to the dollar’s 4% recovery rather than weakening fundamentals.
Central banks, particularly Poland and China, continue aggressively purchasing gold to diversify away from dollar dependency. Recent Basel III banking regulation changes will upgrade gold’s status for U.S. banks, potentially boosting institutional demand as physical gold can now be counted as a Tier 1 asset at full market value instead of a Tier 3 asset at half value.