TD, a financial institution, is cautious about the future of gold prices due to various factors. They believe that the current positioning of discretionary traders is skewed towards the downside, with many traders having long positions. This could lead to a potential decrease in gold prices. Additionally, TD mentions that the market is experiencing excessive speculation beyond what would be expected with potential Federal Reserve interest rate cuts. This could also contribute to a decrease in the price of gold.
Another factor that TD is concerned about is the decrease in Asian buyers of gold. They have noted that there has been a significant decline in gold purchases by Asian buyers, particularly in China. This lack of demand from key markets could further contribute to a potential decrease in gold prices.
Moreover, TD highlights that there have been notable long liquidations on the Shanghai Futures Exchange. This means that investors are selling off their long positions in gold, which could lead to a decrease in prices. TD warns that if this trend continues, there could be a liquidity vacuum in the market, with fewer buyers available to offset potential liquidations.
In terms of price levels, TD believes that gold is vulnerable to dropping below US$2380 per ounce. This indicates that they foresee a potential downward trend in gold prices if current market conditions persist.
The absence of gold purchases by the People’s Bank of China for the second consecutive month is also a cause for concern, according to TD. The lack of demand from a major buyer like the PBOC could signal a shift in the market dynamics and may impact the future price of gold.
Overall, TD’s cautious outlook on gold prices is based on a combination of factors, including trader positioning, speculative activity, decreased Asian demand, and long liquidations. Investors in the gold market should be aware of these risks and monitor the market closely for any potential changes in price levels.