According to TD Securities’ Ryan McKay and Bart Melek, gold and broader precious metals have maintained their strength despite an increase in near-term probabilities for a Federal Reserve rate hike [1]. The analysts emphasize that the upcoming US inflation data will be a pivotal catalyst for both Fed pricing and discretionary flows in the precious metals market [1].
The report notes that a stronger jobs report initially put downward pressure on gold prices, but this effect was mitigated by less hawkish commentary from Federal Reserve officials and currency interventions, underscoring the market's heightened sensitivity to new data and headlines [1]. McKay and Melek state, "Inflation data is the next big catalyst, and an upside surprise would embolden Fed pricing and weigh on the yellow metal, while less worrisome inflation could ultimately be the first catalyst to see the next wave of discretionary positioning start to enter the market" [1].
Despite the potential for a hawkish shock from the Fed, the analysts highlight that structural supports remain in place for gold, including themes of dollar debasement, elevated central bank buying, and renewed ETF accumulation [1]. They suggest that a hawkish Fed may only delay, rather than derail, the next upward move in gold prices [1].
CONCLUSION
TD Securities analysts believe that upcoming US inflation data will be crucial for gold's near-term direction, with structural supports likely to limit downside risk. Market participants are advised to closely monitor the inflation print, as it could set the stage for the next significant move in precious metals.