Gold: Investors extend longs but hedge risks – TD Securities
TD Securities strategists note that money managers sharply increased long Gold exposure as modest inflation, soft United States (US) employment data and expectations that the Federal Reserve (Fed) will not hike rates this year weigh on the US Dollar (USD).
Gold investors have extended their long positions while hedging risks, according to TD Securities strategists. This comes as modest inflation, weak US employment data, and expectations that the Federal Reserve will not raise interest rates this year have put downward pressure on the US dollar. Some investors have also added short positions to protect against potential declines in gold prices, acknowledging the possibility of higher oil and interest rates due to geopolitical instability in the Persian Gulf region.
Speculation surrounding the Fed's potential inaction on rate hikes and ongoing Middle East turmoil has encouraged investors to increase their exposure to both gold and oil. The combination of modest inflation, a lackluster US employment environment, and a lack of anticipation for another major rally in oil prices has prompted money managers to aggressively boost their long gold positions.
Traders believe that the Fed will not hike rates this year, leading to subdued interest rates on the short end of the curve and weakening the US dollar. However, a small number of money managers have added short positions to safeguard against a decline in gold prices, fearing that higher oil and interest rates could still materialize given the geopolitical instability in the Persian Gulf.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
