(Kitco News) Gold market continues to struggle to attract consistent bullish momentum, with price retesting support at $1,700 per ounce, with one bank nearing a surrender sell I’m looking at it.
On Thursday, TD Securities’ commodity analyst reiterated its bearish outlook for gold, saying the outlook was “gloomy” as the Fed signaled more aggressive monetary policy action with further rate hikes and quantitative tightening.
“Precious metals are in jeopardy. Every drop in the price of gold increases the likelihood of a major surrender event, which is below the decades-long uptrend of the yellow metal near $1675/oz. It may be consistent with
TDS said investors should continue to watch out for speculative positioning in the gold market. Since March, speculative positioning in the Comex futures market has dropped sharply. However, analysts say there is room for further declines in sentiment and positioning.
“Although the Federal Reserve’s hawkish rhetoric has driven money manager positioning to multi-year lows, the gold market remains very much a private sector owned by a handful of family offices and proprietary trading shops. Characterized by a concentrated and bloated position, and somewhat self-indulgent given that it has nothing to do with the Fed’s stagflation theory, but rather a build-up in 2020. There are risks,” analysts said.
The bearish outlook comes as market expectations for a 75 basis point hike in interest rates by the US Central Bank in September are mounting. Last week, Fed Chairman Jerome Powell warned the market that interest rates could continue to rise for longer to ensure inflation remains stable.
TD Securities has been tactically shorting gold since late July. Canadian banks have been tactically short silver since mid-August.
TDS is bearish on precious metals, but also points to positives in the market. In a separate note on Thursday, the bank said the gold market continued to see strong demand from China.
“The top players in the Shanghai market continue to increase their gold holdings even as the yuan depreciates. likely prevented gold from melting in the vacuum of liquidity,” analysts said.
Gold demand in China has recently received renewed attention as the country re-enters the market after two years of turmoil caused by the global COVID-19 pandemic. Gold exports to China in July he rose 150%, according to Swiss trade data last month.
Data show that 80.1 tonnes of gold were shipped to mainland China, the largest monthly shipment since December 2016.
But despite rising physical demand in Asia and solid demand from central banks, TDS analysts said this would not be enough to stop gold prices from falling below $1,700 an ounce. .
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