Inflation Data Set to Trigger Next Major Gold Price Direction

Gold prices have remained resilient despite markets pricing in higher probability of near-term Federal Reserve rate hikes. TD Securities notes that gold and other precious metals have held firm, with the next major catalyst being upcoming US inflation data.

Analysts at TD Securities believe that structural factors continue to support gold, including a renewed dollar-debasement theme, elevated central bank buying, and renewed ETF accumulation.

The analysts warn of heightened volatility in the gold market as it approaches the upcoming U.S. inflation print, recommending that derivative traders consider buying short-dated put options or employing bear put spreads if the inflation data surprises to the upside.

However, they also suggest positioning for a bullish breakout by utilizing long call options or bull call spreads if the inflation print is cooler-than-expected.