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TDS: COVID-19 fears interrupt but won't stop upward momentum in gold prices

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(Kitco News) - Rising COVID-19 worries have interrupted, but not canceled, gold’s break higher this week, said TD Securities. The metal hit a seven-year high around middle of the week before giving up some of its recent strength. Comex August gold peaked at $1,796.10 an ounce on Wednesday but was at $1,769.20 as of 8:49 a.m. EDT Friday. Spot metal peaked just shy of $1,778.30 on Wednesday but was at $1,760.10 Friday. “Indeed, the yellow metal's third attempt to break out into the $1,800s was interrupted by renewed virus concerns, which have paused the rise in long-term inflation expectations that we have seen over the past few trading sessions,” TDS said. “Nonetheless, we expect that growing confidence in the economic recovery, amid extremely low rates volatility, will help long-term inflation expectations continue to rise. In this context, declining real rates will support gold prices into the $1,800s. Looking forward, we also see substantial room for this driver to run, as the entire maturity spectrum of inflation break-evens are priced below policy objectives.” Analysts added that “inflation-hedge assets may grow in popularity.”

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