Gold: Upside asymmetry into next week – TD Securities

TD Securities’ Ryan McKay and Bart Melek note that Gold and broader precious metals are trading in a higher range that could trigger another round of CTA (Commodity Trading Advisors) buying. Their scenario analysis shows upside asymmetry for Gold into next week, supported by Treasury efforts at the long end and a Federal Reserve willing to look past higher energy prices, though 2027 rate hike pricing keeps them cautious.

CTA triggers approach for Gold

"Precious metal pricing moves closer to another round of CTA buying, and pricing simulations highlight upside asymmetry across the complex into next week."

"CTAs test precious metal upside into weekend. While the barrage of recent flows has notably slowed, and interest rates have cast doubt on the feasibility of the Treasury's liquidity plans, gold and precious metals are likely to find comfort in this higher range."

"The signal of the Treasury looking to support the longer end may offer enough support on its own, alongside a Fed willing to look past higher energy prices."

"Top SHFE traders have also been strongly back on the bid in gold in recent days, while Chinese ETF inflows have recovered after a brief spell of outflow."

"However, with the market still pricing in hikes for 2027, we remain cautious regarding expectations for the next leg higher in gold, which may require the broader market to become more convinced that the Fed remains on hold."

"Prices are now closer to new buying triggers across the complex, and our pricing scenarios for gold, silver and platinum point to notable upside asymmetry for CTA positioning in a flat to uptape price path through next week."

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