TD Securities’ Senior Commodity Strategist Daniel Ghali has highlighted that gold is facing a challenging environment due to conflict-driven risks in the Middle East, which are straining official sector demand and prompting continued selling by Commodity Trading Advisors (CTAs) [1]. Ghali notes that Middle Eastern and other energy-importing nations may reduce their bullion purchases to zero as the economic toll from the conflict rises, creating vulnerabilities for gold prices [1]. This risk is now broadening globally, affecting other energy importer nations as energy prices surge [1].
Ghali explains that CTAs are expected to keep selling gold in the near term, though the scale of selling will likely be modest [1]. He warns that shrinking official sector demand removes a safety net for institutional investors participating in what has become a crowded trade, with unprecedented retail participation already fueling extreme price movements in recent months [1].
Despite these pressures, Ghali asserts that gold's long-term bull trend remains technically intact. However, he points out that the bull-market era trendline sits roughly $1000/oz lower than current prices, suggesting there is substantial scope for further price declines without technically endangering the bull market [1].
No specific market reactions or analyst opinions regarding immediate price movements were provided, but Ghali's comments indicate a cautious outlook for gold in the near term, with potential for more pain before a buying opportunity emerges [1].
CONCLUSION
TD Securities sees gold facing near-term headwinds as official sector demand wanes and CTAs continue to sell, driven by conflict-related risks and surging energy prices. While the long-term bull trend remains intact, there is significant downside risk before a potential recovery. Investors should be cautious, as vulnerabilities in gold prices may persist until official demand stabilizes.