Gold To Rally To $1,360 ‘Sooner-Than-Expected’ — TD Securities

Gold’s move up to $1,323 could mean that a rally towards $1,360 is coming “sooner-than-expected,” said TD Securities, citing a possible rate cut by the Federal Reserve as a trigger for the yellow metal.

“Gold set [to] rally towards our $1,360/oz target sooner-than-expected,” TD Securities commodity strategists wrote in a note on Monday. “Given that the market is increasingly pricing in a U.S. rate cut this year, the US dollar is on a weak footing and considering that equities are generally more worried about growth, gold could well move into a higher trading range sooner than expected.”

TD Securities sees gold prices rising to $1,360 within three months and then moving towards $1,400 next year.

“We suspect that current prices will prompt aggressive CTA buying along with additional spec length,” TD’s strategists stated.

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The latest boost to gold prices came from the drop in rates across the yield curve, noted TD Securities.

“Gold jumped to its highest in some three-weeks as the Fed adjusted the dot plots to signal no more interest rate hikes this year, global growth concerns grew, the USD dollar migrated lower and the yield curve inverted, adding upside risk to gold into $1,360/oz territory,” the strategists pointed out.

Going forward, gold investors should pay close attention to global macro releases that focus on inflation and growth, the note added.

“A global easing cycle … could risk triggering competitive devaluations. Both PCE inflation and the series of growth prints will be crucial towards gathering additional insights as to whether the market’s pricing of cuts is warranted,” the commodity strategists wrote.

At the time of writing, April Comex gold futures were trading at $1,321.40, down 0.09% on the day, after hitting a four-week high earlier in the session.

“Some safe-haven buying amid wobbly world stock markets, combined with chart-based buying interest, are lifting the two precious metals markets,” wrote Kitco’s senior technical analyst Jim Wyckoff.

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