Gold: Upside asymmetry into next week – TD Securities

TD Securities analysts Ryan McKay and Bart Melek highlight that gold and precious metals are trading in a higher range, potentially leading to another round of CTA buying. Their analysis indicates an upside asymmetry for gold into next week, bolstered by Treasury initiatives on the long end and a Federal Reserve focused on energy prices, even if a 2027 rate hike pricing remains a concern.

As precious metal prices inch closer to additional CTA buying opportunities, price simulations illustrate upside potential across the complex into the upcoming week. Although trading flows have lessened, and interest rates have raised doubts about the Treasury's liquidity strategy, gold and precious metals are expected to find solace in this elevated range.

The prospect of Treasury supporting the longer end, along with a Fed willing to overlook higher energy prices, could provide sufficient backing. Major SHFE traders have recently demonstrated strong buying interest in gold, while Chinese ETF inflows have rebounded after a period of outflows. However, the market still anticipates rate hikes through 2027, so caution persists regarding the likelihood of the next gold rally, which might necessitate broader market confidence that the Fed will remain idle.

Now, precious metal prices are nearing new buying triggers across the complex, with pricing models for gold, silver, and platinum suggesting substantial upside potential for CTA positioning in a flat to uptrend price trajectory through next week.