Gold Price Forecast: XAU/USD not reflect the implications of a sustained period of restrictive policy – TDS
|Gold markets have failed to price the implications of a sustained period of restrictive interest rates. Therefore, economists at TD Securities expect the yellow metal to remain vulnerable.
Odds of a major capitulation event grow with every tick lower
“Historical analogs suggest that periods in which market expectations for the real fed funds rate were above estimates of the natural rate of interest were accompanied by a persistent underperformance in gold prices. In turn, while gold prices may now have accurately captured the expected level of interest rates, they are not reflecting the implications of a sustained period of restrictive policy.”
“We see odds of a major capitulation event growing with every tick lower in gold prices, which could coincide with a break below a multi-decade uptrend in the yellow metal near $1,675.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.