According to strategists at TD Securities, gold prices are currently close to all-time highs, and they provide an analysis of the outlook for the precious metal.
The balance of risks for gold prices leans towards the upside. Despite robust US data, the Federal Reserve (Fed) may use trends in core PCE (Personal Consumption Expenditures) to justify initiating rate cuts. The Fed’s aim is to achieve a soft landing, prioritizing disinflation over growth.
A cutting cycle by the Fed is anticipated to attract discretionary trader capital, providing support for gold and potentially propelling it to new all-time highs.
Key factors contributing to the positive outlook include substantial dry-powder held by CTA (Commodity Trading Advisor) trend followers for deployment, ongoing strong buying activity in the physical gold market, and increased gold purchases by China. These factors collectively indicate a favorable risk balance for gold prices on the upside, despite strong economic data.
