TDS: measures ‘should help cement a multi-year rally’ in gold prices
(Kitco News) -A stronger U.S. dollar into the end of the first quarter is pressuring gold at the moment, but the metal should gain traction in the intermediate term as a result of recent government measures to protect the economy and markets from the COVID-19 virus, said TD Securities.
A recovery in gold prices from the lows earlier this month was helped by inflation expectations following government stimulus efforts and central-bank quantitative easing.
“In the immediate term, gold prices appear to have run ahead of real rates, but looking forward, as the dust settles on COVID’s impact, we expect gold to perform smartly in the next phase of this narrative,” said a research note from TDS analysts. “The extraordinary QE package, combined with large government stimulus packages, reek of MMT [Modern Monetary Theory], which should eventually send real rates on a downward trajectory, particularly as global central banks will be willing to let inflation run hot as part of their symmetric targeting framework. This should help cement a multi-year rally in the yellow metal.”
As of 9:48 a.m. EDT, Comex June gold was down $17.80 to $1,625.20 an ounce but well up from the mid-moth low of $1,488.60.