Interrupted inflation expectations weigh on gold price: TD Securities
(Kitco News) Fears around lack of additional stimulus measures are weighing on gold, which had failed to stay above the $1,900 an ounce level when stocks sold off and the U.S. dollar climbed late Tuesday afternoon on news that the U.S. President Donald Trump canceled stimulus talks until after the election. "Given the fading tailwinds of the last fiscal deal, this raised concerns that the U.S. may lose economic momentum before a new fiscal deal is agreed upon. In turn, these fears interrupted the renewed rise in inflation expectations that had underpinned the recent strength in gold prices," write TD Securities commodity strategists. However, gold's long-term prospects remain optimistic as more stimulus is inevitable after the election. "We argue that the long gold trade's success is actually agnostic to the elected party. Barring a split government outcome, both administrations are likely to push through a large-scale fiscal deal in no time that would help de-bottleneck the real rate suppression, lifting precious metals in the process," the strategists add.