Analysts at TD Securities suggest that they are going long on gold, as they expecting a weaker USD and reversal in positioning to buoy the yellow metal.
Key Quotes
“The USD’s strong momentum is set to lose steam, as recent statements from President Trump accusing America’s trading partners off currency manipulation and his break with tradition to criticize Fed policy provides a catalyst for fundamental factors.”
“With the ECB QE unwinding on the way, we see the euro trend towards the low 1.20s later this year. This should help deflate the DXY currency index, which has been such a negative for gold of late.”
“Positioning
USD optimism, trade and EM angst have prompted investors to shun gold, dragging net positioning near the lower bound as money mangers hold excessive shorts and are significantly underweight. In fact, further analysis suggests gold traders hold significant amount of dry-powder to increase their bullish bets, but are constrained on the short-side.”
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