Risk of gold selloff in the near-term if prices fall below $1,900: TD Securities
(Kitco News) There is a risk of another selloff in gold if prices drop below the $1,900 an ounce level, says TD Securities. “A low hurdle for CTA liquidations could catalyze further liquidations in the near-term in gold, as trend-followers could halve their length should prices break below the $1,900/oz range,” write strategists at TD Securities. Also, a lot of investors are sitting on the sidelines and waiting for the election to play-out. “There is also some evidence that money managers are waiting on the sidelines for the event risk to pass, which could suggest positive flows to risk assets and re-leveraging as a result of the reduced uncertainty following election day,” note the strategists. However, the long-term outlook remains a positive one for gold. “Gold traders are discounting macro implications of the forthcoming election. Would a Blue Wave catalyze a reflation-induced rise in real rates, or would large scale fiscal stimulus combined with an uber-supportive Fed policy drive real rates substantially lower thereafter? Our money is on the latter,” the strategists add.
Author: Anna Golubova