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Yesterday’s rally in gold went a long way towards removing some left tail risk, as prices built some margin of safety above the nearest CTA trigger for liquidations, per TD Securities.

Key quotes

“We’re not out of the woods just yet in the coming weeks, as our sentiment readings suggest that fear has subsided. It’s worth reiterating that gold is a high beta asset to pandemic sentiment into the fear stage of the narrative, as the highly deflationary impulse from containment efforts could send real rates higher.”

“Gold and other high beta assets are exposed to a renewed round of panic. It’s worth noting that the narrative surrounding Covid-19 is itself highly contagious, as it encourages many repetitions for discussion, involves celebrities, and can easily be surrounding by many parallel narratives (such as the resulting economic fallout).”

“The left tail remains fat in precious metals, our trend analytics highlight that fading upside in silver could be beneficial as prolonged weakness in industrial demand should keep silver’s recovery under wraps for now.”

“Looking forward on the horizon, we think the set-up for a multi-year bull market is being cemented.”