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The U.S. dollar's rise is fueling gold price pullback: TD Securities

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(Kitco News) The rise in the U.S. dollar is dragging the precious metals sector down, says TD Securities. “Precious metals continue to pullback, led by a technical break in the broad dollar's downtrend, fueled by fears of a renewed lockdown in the UK amid a broader European second wave and Justice Ginsberg's passing, which has further increased the likelihood of an impasse for a Phase 4 fiscal deal,” the bank’s commodity strategists write. “In this context, a sharp sell-off in global risk assets have pulled gold lower amid high cross-asset correlations, while a bloated positioning slate has further punished the late-longs in the yellow metal.” The volume-weighted average gold price post-Covid shock is well below the current levels — near $1,770 an ounce. “[This] still suggests a challenging set-up for a broader rush-to-the-exits, as this anecdotally suggests that the breadth of traders feeling pain is low. This is further highlighted by the sharp rise in ETF holdings of gold in recent days, suggesting that investment appetite has yet to be satiated. The risk for gold bugs is therefore limited to an extension of the global risk-off which catalyzed the dollar's breakout.”

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