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As traders liquidate long positions, hopes of inflation and the Fed keeping rates at 0% may mark a good entry point due to the recent dips in gold prices, per TD Securities.

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Key quotes

“Speculative participation in gold continues to dwindle as surging risk appetite saps interest from the market, with traders liquidating long positions and adding shorts.” 

“Safe-haven flows likely reversed course amid fiery equity markets fueled by unprecedented stimulus liquidity and improving economic sentiment as economies reopen. The extremely bullish May jobs data and 10yr treasury yields nearing 1% likely prompted further liquidations to end the week.”

“If this is indeed the beginning of a V-shaped recovery, this recent dip in gold represents an ideal entry point as it signals the end of deflationary concerns and the beginning of increasing inflation expectations, which along with a Fed keeping rates at 0, keeps real rates suppressed into deeper negative territory.”


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