TD predicts that gold will fall below $1,800 in the short term, and the average price this year will be around $1,841

The gold market is under pressure again and is currently trading below $1,850 an ounce, trading around $1,823, as escalating Fed rate hike expectations push the dollar index to a 20-year high and bond yields to an 11-year high.



Concerns about inflation continue to dominate financial markets, according to market analysts, with growing expectations that the Federal Reserve will have to act more aggressively to reduce inflation.

GMT+8 At 02:00 on June 16, the Federal Reserve will announce its interest rate decision, policy statement and economic forecast. The Fed has previously signaled that it wants to raise rates by 50 basis points at this meeting and at its July meeting.

A sharp post-summer Fed rate hike could weigh on gold in the near term, TD Securities commodities analysts said. Markets now expect the Fed to raise rates by 75 basis points in September.

Analysts at TD Securities warned that rising interest rates would negatively affect gold, a non-yielding asset, in the short term. The Canadian bank expects gold prices to fall below $1,800 an ounce in the near term.

However, analysts added that the sell-off could make the market healthier in the long run, as there is a lot of complacency in the market . Investors are still looking for catalysts to remove a lot of complacency for a length of time. TD Securities believes that a technical glitch could be the catalyst. First, the bar for CTA unwinding is getting tighter, as the bank estimates that a break below $1,810 an ounce will trigger massive selling by systemic trend followers.

After looking at short-term volatility and weakness, TD Securities still sees long-term potential in gold. Currently, TD Securities expects gold to average around $1,841 an ounce this year.


(Spot gold daily chart)

At 9:28 on June 14, GMT+8, spot gold was quoted at $1,823.62 per ounce.