Gold May Bounce Back Above $5,000 an Ounce: TD Securities

Gold's current weakness may be temporary according to TD Securities, as Senior Commodity Strategist Ryan McKay sees room for investment demand to grow further in an environment of growing fiscal uncertainty.

McKay noted that despite the Federal Reserve maintaining a tighter monetary policy stance, underlying investment demand remains resilient and is starting to strengthen across several important segments of the market.

The Canadian bank estimates that discretionary positioning in gold-backed exchange-traded funds (ETFs) remains about 30% below its 2022 peak and 50% below estimated record highs reached in 2016, but has improved through the early summer and remained relatively resilient even as expectations for higher interest rates strengthened.

TD Securities sees elevated geopolitical uncertainty, de-dollarization, concerns about currency debasement, deteriorating fiscal conditions and persistent inflation fears continuing to support investment demand.