Can gold rally even if Treasury yields rebound?

Over short horizons the gold price is often driven by the same factors that determine US Treasury yields. This means that the price of the precious metal now looks increasingly vulnerable to a correction if, as we expect, safe-haven demand wanes and Fed rate hikes return to the agenda. Nonetheless, over longer periods other drivers can and probably will dominate. We therefore reiterate our end-2016 forecast of $1,250 per ounce and still see plenty of upside potential over the coming years.