Gold prices are currently reaching near all-time highs and TD Securities strategists have delved into the outlook for the precious metal.
The balance of risks in Gold prices appears to be tilted towards the upside, according to analysts. Despite strong US data, the Federal Reserve could justify the start of rate cuts by looking at trends in core PCE. The Fed’s aim is to orchestrate a soft landing, prioritizing disinflation over growth.
Furthermore, the prospect of a cutting cycle could potentially attract discretionary trader capital, providing additional support for Gold as it moves towards new all-time highs.
Additionally, CTA trend followers still have substantial dry-powder to deploy, while physical market buying activity has remained robust. Furthermore, China’s rapid acquisition of gold also contributes to tilting the balance of risks in Gold prices to the upside, even in the face of strong economic data.
Insight:
Despite strong economic data and US trends, various factors such as the Federal Reserve’s potential rate cuts, trader capital influx, and strong physical market buying activity, contribute to the outlook that Gold prices are leaning towards a further increase. This suggests that the current environment is ripe for Gold to maintain its upward trajectory in the near future.
