Truist Upgrades Gold to Neutral on Stabilizing Rates and Weaker Dollar

Truist analysts have upgraded their rating on gold to Neutral from a prior "less attractive" stance, pointing to an improved macroeconomic backdrop for the precious metal. The firm's research note highlights stabilizing real interest rates and a softer U.S. dollar as key catalysts for the more balanced view.

Key Drivers for the Upgrade

In a note led by analyst Keith Lerner, Truist outlined several factors supporting its revised outlook. The analysts argue that the evidence now justifies a less bearish position on gold, which remains approximately 15% below its recent highs.

Key supportive factors identified by the firm include:

• The recent halt in the rise of real Treasury yields, which removes a significant headwind for the non-yielding asset.
• A weaker U.S. dollar, which has declined amid softer economic data and a dovish pause from the Federal Reserve.
• Continued central bank purchases, providing a steady source of demand for bullion.
• An improved technical picture, with gold prices moving above the 200-day moving average.

Interest Rate and Currency Outlook

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The stabilization of real interest rates is a critical component of Truist's thesis. Analysts noted that yields are likely to face further downward pressure after the U.S. Treasury recently doubled the size of its buybacks for long-duration debt. This environment is less challenging for gold, which does not offer a yield.

Furthermore, the U.S. dollar's retreat from recent highs has created a more favorable environment. The decline was attributed to cooling inflation and weaker payroll growth, a backdrop that has historically been supportive for gold prices, as a weaker dollar makes the metal cheaper for holders of other currencies.

Technical and Demand Support

From a technical standpoint, Truist observed that gold's move above its 200-day moving average suggests that downside momentum has eased. This technical signal, combined with fundamental support, strengthens the case for a neutral rating.

The firm also emphasized the ongoing support from global central banks, which have continued to add gold to their reserves. This consistent buying provides an important floor for prices, even amid concerns that the pace of purchases could slow.