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TDS: gold stronger, market prices in 'unprecedented stimulus'

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Gold is higher, with the market still factoring in massive stimulus from central banks and governments, said TD Securities. As of 10:14 a.m. EDT, Comex June gold was $16.20 higher at $1,756.40 an ounce. “If the market is indeed pricing in the impact of the unprecedented stimulus on global assets, look no further than gold,” TDS said. “Safe havens, and particularly the yellow metal, are rallying along with risk assets as the unprecedented scale of QE [quantitative easing] sends a flood of liquidity in markets, but also contributes to the suppression of real rates. While gold remains highly levered to pandemic sentiment, positioning remains fairly clean following a widespread dash-for-cash, with ample dry-powder and little risk of CTA [Commodity Trading Adviser] liquidations. The positioning lens suggests that the left tail has shrunk.” More industrially oriented precious metals are benefiting from “trickle-down” investment demand from the move in gold, but any rally in these metals is likely to be contained by weak industrial demand, TDS said. “In this context, we expect that gold will ultimately outperform.”

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