Bloated positioning weighs on gold price: TD Securities
(Kitco News) Gold's positioning remains bloated, which is triggering a move lower in prices, according to TD Securities. “Positioning in gold remains bloated, which adds some weight to the pain trade lower in prices, but it is hard to argue that a large-scale liquidation is in the cards given that much of the leverage that has been sapped out of global markets in the past few months has yet to be redeployed,” write commodity strategists. As we approach the U.S. November election, political headlines will start to drive the precious metal more and more, the strategists note. Also, lack of new fiscal stimulus measures and growing fears of the second COVID-19 wave are weighing on the stock market and putting downward pressure on gold. “Considering that fiscal stimulus appears to have been a key factor behind the strength in the data over the last few months following the COVID-related plunge in March and April, RBG's death further raised the probability that a Phase 4 deal would not be struck before the election. In this context, second wave fears are driving flows as the market sees little support from policymakers over the next months, with arguably little-to-no valuation support to lean on in the meantime,” the strategists add.