According to TD Securities analysts Ryan McKay and Bart Melek, the longer-term outlook for gold has materially improved due to growing concerns over dollar debasement and less hawkish commentary from the Federal Reserve. Speculation about potential currency intervention has put pressure on the dollar, while recent comments from Fed's Waller have led to lower interest rates, providing a boost to precious metals in the morning session. As a result, CTAs (Commodity Trading Advisors) have shifted to buying silver and palladium, and gold has moved away from nearby CTA selling triggers [1].
The analysts emphasize that upcoming US economic data, specifically non-farm payrolls due this Friday and inflation data expected next week, will be critical for determining the next move higher in precious metals. This is particularly relevant given the renewed hawkish tone from Fed Chair Warsh at Jackson Hole and recent escalations in the energy market. Despite elevated hike pricing due to persistent inflation concerns, the timing of any further upward movement in gold remains uncertain [1].
TD Securities notes that while the market is still pricing in potential rate hikes, the overall backdrop for precious metals has improved, especially as the certainty of additional Fed hikes is in question. The analysts highlight that the renewed theme of dollar debasement is a key factor supporting the improved long-term landscape for gold [1].
CONCLUSION
TD Securities sees a materially improved long-term outlook for gold, driven by dollar weakness and uncertainty over further Fed rate hikes. Upcoming US economic data will be pivotal in determining the next move for precious metals, with market participants closely watching inflation and employment figures.