There is additional room for Gold price to drop further – TDS

Analysts at TD Securities note that Gold price dropped below $1,980/oz after the preliminary US Services PMI printed a much stronger-than-expected 53.7 for April.

Strong data suggests more gold downside

"This forced rates up across the curve, which drove the US Dollar sharply higher. It seems we are seeing USD shorts being covered, after specs increased positions amid expectations of a Fed dovish pivot. Similarly, in the gold market, money mangers are also likely increasing recently reduced shorts and are cutting acquired longs."

"With the PMI and potentially other economic data pointing to continued economic strength, the market is starting to bet that rates may continue to increase. As such, there is additional room for gold to drop further. Indeed, we are projecting a $1,975/oz gold price in Q2. Technically, we see significant support at just above $1,960/oz. However, we see the yellow metal trend at $2,100/oz in late H2-2023."

"Traders should keep an eye on data during the Fed's quiet period. Strong data suggests more gold downside, while weakness implies strength for the yellow metal."