Gold might appreciate to $2,000 by late 2021 – TDS

Gold has rallied steadily since mid-March, to reach multi-year highs near $1,800, and, according to the Commodities Strategy Team at TD Securities, the trend might extend with the global economy picking up.

Key quotes

“Spot gold slipped below $1,770/oz immediately after the much stronger-than-expected US June payroll (+4.8 million) data. The very strong positive equity market response to the jobs data likely drove more capital into risk assets at the expense of gold, at least initially (…) However, the yellow metal has now rebounded back to over $1,770/oz and will likely perform well into Q3.”

“The USD is weakening, and real rates should drop as inflation expectations continue to rise. Despite the strong jobs data, wages are lower, labor participation is near the lows and the economy will function at below potential for some time, requiring massive debt-financed fiscal stimulus and low policy rates for the foreseeable future.”

“As such, we are happy with our positive gold view and continue to see the yellow metal trending toward $2,000/oz into late-2021.”