Gold: Multi-year rally – TDS

The recovery in gold prices has been made possible by the consolidation in inflation expectations following the series of government and central bank interventions, strategists at TD Securities report.

Key quotes  

“Gold holds the highest beta to pandemic sentiment in our cross-asset basket, underscoring that the recovery in prices coincides with a period of subsiding fear.” 

“We have cautioned that gold has performed poorly as a hedge against the virus' sharp deflationary impulse, but we argue that the complex will perform smartly in the next phase of this narrative.” 

"By the end of this week, the Fed would have bought more than $1T of Treasuries, which make gold one of the most obvious trades for what's next." 

“Real rates should eventually return on a downward trajectory, with global central banks likely willing to let inflation run hot, helping to cement a multi-year rally in the yellow metal.”