Gold Price Forecast: XAUUSD recent rally will ultimately fade – TDS
08.08.2022, 13:11

Gold Price Forecast: XAUUSD recent rally will ultimately fade – TDS

A blockbuster jobs report sparked a brief repricing in gold, but prices have bounced back firmly. Nevertheless, strategists at TD Securities expect the yellow metal's rally to be largely reversed.

Market continues to grapple with expectations for the Fed's next move

“While market pricing has shifted more toward another 75 bps hike in September, it is far from locked in and with CPI data set for release midweek, the yellow metal has been able to hold firm. Nonetheless, the post-FOMC short covering has likely run out of steam, particularly amid the stronger data and continued pushback against a pivot in Fedspeak.” 

“After briefly hitting CTA triggers to spark another round of short covering, the jobs report has quickly put a cap on the move and the buying flow has turned to modest selling.”

“Prop traders still hold a significant amount of long positions, and a continuation of strong economic data could be the catalyst needed to see an unwind. In this sense, we have yet to see capitulation in gold, suggesting the pain trade is still to the downside, and we expect the recent rally will ultimately fade.”

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