Gold Set for New Bull-Run Above $5,000 an Ounce by 2027
TD Securities believes that despite gold's recent dip below $4,300 an ounce, it will likely reach prices above $5,000 an ounce by 2027. According to Ryan McKay, Senior Commodity Strategist at TD Securities, the metal has proven resilient in the face of Federal Reserve tightening and is supported by rising investor and central bank demand.
McKay notes that the usual link between gold and interest rates has ceased to function, as evidenced by historical instances where gold climbed with rising real rates when broader macroeconomic dangers were a concern. Geopolitical instability, de-dollarization, worries over currency debasement, worsening fiscal conditions, and lingering inflation anxieties continue to underpin investment demand.
TD Securities points out that three more Federal Reserve rate increases have already been factored into market pricing, setting up asymmetric risk for gold, which could speed up gains in precious metals if the central bank falls short of delivering those hikes.
The bank's constructive view on gold is not based solely on monetary policy. McKay highlights a transformation in investment flows, with bullish speculative positioning strengthening as discretionary macro investors have been adding back net-long exposure since June. This purchasing has provided support to gold during the early summer and held up fairly well even as expectations for higher rates grew stronger.
McKay attributes the initial momentum behind these flows to renewed geopolitical worries, firmer central bank buying, and doubts about the Federal Reserve's capacity to keep inflation in check. Lately, unease over U.S. fiscal policy and fresh currency debasement themes have sustained investor interest in gold despite tighter monetary conditions.