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In an interview with Kitco News late Friday, TD Securities (TDS) Head of Global Strategy, Bart Melek believe gold prices will now consolidate, as the bulls gather pace for a break above the key $1800 psychological levels.

Key quotes

“Risk-off sentiment is good for gold but a significant escalation in coronavirus cases could potentially hamper the gold rally because at the end of the day it all comes back to inflation expectations.”

“What we are seeing is a counter-intuitive phenomenon happening. On Friday morning, gold dropped along with equity markets.”

“The yellow metal’s third attempt to break out into the $1,800s was interrupted by renewed virus concerns, which have paused the rise in long-term inflation expectations that we have seen over the past few trading session.”

“Gold has bounced off the resistance and has gone back to the technical support level of $1,764 and will now consolidate around $1,800 and try to break through.”

“Much will depend on where the economy seems to be going,” he said. “The big concern for gold is that real interest rates may not go down because inflation may be slow to recover because we are getting re-infections in the US.”

“A lot of the price moves next week will be determined by the macroeconomic numbers.”

“Good news is going to be good for gold as well.”

“The minutes are likely to confirm the Fed’s accommodative policy. Don’t think we rally on anything here. Powell has already been as bullish as can be. It will be important to watch any nuanced view that the Fed may not be as aggressive as the markets are pricing in.”