A firming USD along with an increase in risk appetite prompted money managers to aggressively reduce their long gold exposure, per TD Securities.
Key quotes
“The concern surrounding an upward creep in real interest rates, as an extremely weak economy forces price expectations lower while the Fed stays steadfast to its commitment to keep Fed Funds above zero, also contributed in reducing length.”
“Judging by gold’s failure to break higher after the BoE left the door open to negative rates and Fed Fund futures yields moved into negative territory, prices are likely to hover near the lower bound of the range, with little chance investors extend long exposure materially in the near-term.”
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