FXStreet notes that gold has surged around $60 during the early European session and spiked to fresh daily tops, near the $1935-37 region after an early slide to the $1862-63 region, or three-week lows. Bart Melek, Head of Commodity Strategy at TD Securities, believes the correction represents a second opportunity to get on the precious metal bandwagon.
“Real rates are now rising along with nominal yields due to stimulus optimism and risk appetite, with the USD also off its lows. Given that the US economy will continue to positively respond to an additional trillion dollars worth of fiscal stimulus and continued Fed measures, it is quite likely that rates and the dollar may see some better days into 2020. This, along with profit-taking by the very active retail investors and COMEX margin increases should see gold consolidate lower.”
“Given the technicals and the fundamentals, it would not be surprising to see spot gold trend down to around $1890/oz and silver at around $22/oz, before hitting new records.”
“Before the complex hits new highs ($2,100+, $30+), there will need to be confirmation that the Fed will indeed suppress yields, consider average inflation targeting and there are signs that inflation may move higher. At the same time, markets will want to see if monetization of debt is in the cards, before talk of these levels becoming sustained is credible. TD securities projects an average gold price of $2,100/oz in Q4-2021 and $30/oz silver price during the same period.”
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