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Gold to perform well in Q3, on track to $2,000 by late-2021 - TD Securities

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(Kitco News) Gold is likely to have another solid quarter after it wrapped up Q2, up more than 14% since the start of the year, according to TD Securities. 

After some turbulent trading near the $1,800 an ounce level, gold is back in a tight trading range right below that resistance level. At the time of writing, August Comex gold futures were trading at $1,795.2, up 0.29% on the day. 

“The yellow metal has now rebounded back to over $1,770/oz and will likely perform well into Q3,” TS Securities commodity strategists wrote last week. 

Any sell-offs due to positive macro data are likely to only be temporary for gold as higher precious metal’s prices and firmer economy can co-exist alongside each other, the strategists pointed out. 

“Spot gold slipped below $1,770/oz immediately after the much stronger-than-expected U.S. June payroll (+4.8 million) data. The very strong positive equity market response to the jobs data likely drove more capital into risk assets at the expense of gold, at least initially. There’s an element of missing-out anxiety that is lifting risk appetite,” they said. “However … the USD is weakening, and real rates should drop as inflation expectations continue to rise.”

There are some COVID-19 after-effects that will continue to linger long-term, boosting gold higher for the rest of 2020 and into 2021. 

“Despite the strong jobs data, wages are lower, labor participation is near the lows and the economy will function at below potential for some time, requiring massive debt-financed fiscal stimulus and low policy rates for the foreseeable future. As such, we are happy with our positive gold view and continue to see the yellow metal trending toward $2,000/oz into late-2021,” the bank's strategists noted. 

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