FX.co ★ XAU/USD, GOLD

XAU/USD Gold and other precious metals are probably going to stay comfortable in a higher trading range, according to Ryan McKay and Bart Melek of TD Securities. Near-term gold is supported by Treasury backing for the long term and a Fed that is tolerant of greater energy prices, even if systematic and ETF inflows have slowed and rates have increased. Further gains, though, might have to wait for a stronger Fed-on-hold conviction. "While the barrage of recent flows from systematic funds, macro discretionary funds, Asian speculators, and ETFs has notably slowed, and interest rates have moved higher again after yesterday's liquidity measures, gold and precious metals are likely to find comfort in this higher range. The next step upward for gold, however, is unlikely to occur before the market as a whole grows more certain that the Fed will remain on hold because the market is still pricing in rises for 2027. Moving away from bond yields and towards other stores of wealth might account for a portion of the change. Official-sector involvement can only go so far and may eventually backfire, despite the fact that U.S. initiatives have purchased time and offered respite. Globally, fiscal discipline is still fundamentally difficult, leaving inflation with a fiscal markup that is almost permanent. The fact that short utilisation wasn't high in the first place may be one of the reasons for the relief rally following the news of the U.S. Treasury repurchase was short-lived. That is supported by our data. As the curve steepened, investors profited from long-term protection rather than rebuilding it.