Gold: Higher-rate risk to keep prices range-bound – TD Securities

TD Securities strategists see Gold supported by doubts over the Federal Reserve (Fed) but with limited near-term upside. They argue that potential oil-driven inflation could keep Gold confined to a defined trading range into early 2027, before easing inflation, a weaker USD Dollar (USD) and lower carry costs drive prices materially higher later that year.

Fed path and oil risks steer gold

"While gold, silver, and PGMs have benefited significantly from the narrative that the Fed will not raise rates this year due to political worries, a willingness to look through an energy price shock, and a lackluster labor market, we see limited additional upside from current levels for now."

"With oil supply still at risk due to ongoing hostilities in the Persian Gulf, energy prices could still rise enough to alter front-end rate expectations this year."

"The bar for another rate hike remains low should oil prices spike again and inflation concerns re-emerge."

"Such a development would likely force gold traders to reprice policy expectations to reflect higher Fed funds rates this year and next."

"The risk of higher rates over this period should keep gold trading in a $4,200-4,500/oz range into early 2027."

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