Gold: Any correction is seen as an opportunity to enter a long position – TD Securities

Analysts at TD Securities see gold rising over the next months and project it will hit $1,650/oz sometime in the second half of 2020

Key Quotes: 

“Gold has moved into a relatively tight range near $1,550/oz, following the failure to breakout higher after the recent surge above $1,600/oz. Similar to what has been the case for the last few months, gold has found support from technical and macroeconomic factors. The yellow metal continues to perform relatively well as many investors, including central banks who are buying the most bullion in some fifty years, see it as a form of insurance against negative real rates and potentially sharp equity market corrections.”

“We are now in a situation where gold has performed well even as the USD and equities moved higher, implying that there may be more systemic reasons to buy gold. Indeed, the pending appointment of two President Trump appointees to the Fed governing body may tilt policy toward a prolonged period of dovishness”

“Since TDS sees two more cuts to the Fed funds rate and a modest slowing trend, we have upgraded our gold forecast and see the yellow metal hit $1,700/oz into 2020-21. And, we don’t see a material correction, unless the big picture changes fundamentally.”

“While we see gold as a somewhat crowded trade, with spec long exposure still near extreme levels, it is unlikely that the yellow metal will fall sharply. Indeed, we expect firm support in a relatively narrow range between $1,515-1,550/oz owing to the fact that there is depth of recent exposure at these levels. The uncertain macroeconomic environment, strong central bank buying and somewhat lower volatility which should keep CTAs maintaining their long tilt which should also serve to prevent a rout. Since we project gold to hit $1,650/oz sometime in the second half of 2020, any correction is seen as an opportunity to enter a long position.”

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.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD trades above 1.18 ahead of US retail sales

EUR/USD is trading above 1.18, off the highs. The dollar advanced along with higher yields, the ongoing fiscal impasse, and upbeat jobless claims. The focus shifts to US retail sales for July. 


GBP/USD trades above 1.3050 ahead of more reopening steps

GBP/USD is trading above 1.3050, off the lows. The UK is set to ease some restrictions over the weekend, extending its gradual exit from lockdown. The US dollar is taking a break after gaining and ahead of retail sales. 


Gold trades with modest losses, below $1950 level

Gold traded with a mild negative bias through the early European session and was last seen hovering near the lower end of its daily range, around the $1945 region.

Gold News

Forex Today: Three reasons for the greenback comeback, all eyes on retail sales

The US dollar has been gaining ground once again as the bond-yield pendulum swings up again. Washington's fiscal impasse, a weak bond auction, upbeat jobless claims, and Sino-American relations will make way for retail sales figures for July. 

Read more

WTI drops to $42 amid poor Chinese data led risk-aversion

WTI (futures on Nymex) has come under fresh selling pressure and attacks the $42 level, as risk-aversion seeps into the European session and diminishes the demand for the higher-yielding assets such as oil.

Oil News