Gold: Tech rebound eases pressure as flows hold firm - TD Securities

TD Securities’ Ryan McKay and Bart Melek note that Gold has found its footing as the tech sector selloff eases, although the recovery remains modest. The analysts suggest that the recent decline was driven more by liquidity pressures and de-leveraging than a fundamental shift in the longer-term bullish outlook. They point to declining leverage among systematic risk-parity funds, limited ETF outflows and Asian follow-up selling, and resilient speculative flows as supporting evidence.

De-leveraging selloff, flows resilient

"An easing of the tech rout has seen gold find its footing to start the week."

"While the recovery is still very modest, and risks remain high that some investors who entered later in the initial rally may have less conviction, there is hope for the bulls that the washout was more liquidity driven than a capitulation of the longer-term bull thesis."

"Our model's measure of systematic risk-parity fund leverage has also started to decline in recent days, further supporting the view that this selloff was more of a de-leveraging event as opposed to a fundamental shift."

"So far, Asian follow-up selling and ETF outflows appear to be only modest, while our higher-frequency gauge of speculative flow strength remains strong."

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