Gold: Near-term selling may only delay next leg higher - TD Securities

TD Securities’ Ryan McKay and Bart Melek note that Gold is outperforming other precious metals even as higher energy prices and rising Fed hike expectations weigh on the complex. They highlight that CTAs (Commodity Trading Advisors) could become sellers if Gold breaks specified downside levels, but stress that Dollar-debasement themes, central bank demand and ETF inflows provide a strong longer-term support base.

CTAs eye key gold downside levels

"Stronger headwinds for precious metals."

"gold gives up some gains but is outperforming the precious complex in relative terms."

"The yellow metal has been able to hold support in the higher range, even as the market grapples with renewed energy upside and the near-term increase in Fed hike probabilities."

"In the near-term, gold will have an elevated sensitivity to incoming data and headlines, with inflation data the next big catalyst."

"CTAs turn modest sellers below $4,367/oz and systematic funds become more prone to heavier selling below $4,300/oz."

"However, on a longer-term horizon the renewed dollar-debasement theme, elevated central bank buying and renewed ETF accumulation offer a strong support base."

"Strong data and a hawkish Fed may only catalyze relatively modest near-term selling, postponing the timing of the next leg higher, rather than leading to material downside."

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