Gold to stay above $1800 fueled by lower real rates – TDS

Gold is trading above $1,800 per ounce and strategists at TD Securities expect the yellow metal to stay above the mentioned level or even higher fueled by lower real rates. 

Key quotes

“Gold remains torn between its safe-haven bona fides, which are prompting money managers to sell on risk-on behavior in markets, and its inflation-hedge characteristics, which are driving a swarm of capital to seek refuge in the yellow metal.” 

“Ultimately the regime change toward inflation protection has been the stronger force in recent weeks, seeing the shiny metal trade at higher ranges, most recently north of $1800/oz, as real rates continue to churn lower. This has renewed speculator appetite of late, seeing net length increase once again, although both longs and shorts have increased.” 

“Moving forward, given positioning is still not extremely stretched, we anticipate that real rates will continue to drive gold prices higher as normalizing inflation expectations and suppressed rates vol provide fuel for the trade.”