Gold to see further falls below $1690 – TDS

The base case scenario for the yellow metal is not a break below the $1690 level but the liquidity scarcity may pull the trigger to the downside, according to strategists at TD Securities.

Key quotes

“As risk appetite continues to firm, the allure for precious metals is fading in the eyes of safe-haven buyers.” 

“Liquidity remains scarce — which could suggest that flow from liquidity takers, such as CTAs, would have an outsized impact in this environment.”

“While not our base case, gold prices are at risk as further downside below $1690/oz could catalyze CTA liquidations that may have an outsized impact as a result of the scarce liquidity environment.” 

“When the dust settles, we continue to expect gold prices to rally as capital seeks shelter from a prolonged period of negative real rates.”