Strategists at TD Securities hear the bulls roaring and expect a stampede making its way following the FOMC meeting where the central bank committed to provide further support to the economy.
Key quotes
“The FOMC meeting provided little discernable new information, apart from a statement suggesting the tapering of Treasury buying had run its course, opening the door for increases in the scale of QE. However, Fed Chair Powell confirmed our expectations — the Fed will maintain its uber-easy policy for the foreseeable future, and may even utilize more tools (such as Yield Curve Control) to support yields amid massive Treasury issuances.”
“With gold on the cusp of a breakout, the ‘second wave’ narrative is interfering with the yellow metal’s rally this morning. After all, gold bugs have learned that the yellow metal does not protect against a deflationary shock like a pandemic. We think there is no new information in the contagion data. Hence, we caution against interpreting this narrative as a sustainable driver of prices. In this context, Systematic trend followers are maintaining a long bias in gold, with a rising hurdle rate for liquidations.”
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