Market Nuggets
Wait-and-see mode sets in on the gold market: TD Securities
(Kitco News) With the U.S. election seven days away, gold traders are now in the wait-and-see mode, says TD Securities. "Participants are also evaluating the potential for a fiscal stimulus deal to be struck in the lame duck session — which hinges on the election results," write TD Securities commodity strategists. A blue wave scenario at the polls is likely to offer support to the gold price in the long-term, the strategists add. "A Blue Wave has driven expectations of a lower dollar, as more stimulus fuels a global reflationary wave, but it has also fueled the bear steepening in the Treasury curve. While we think the Fed will mitigate these risks shortly after the election by extending the duration of QE, the Fed is taking a reactive approach — which suggests that rates may need to rise to prompt them to act. Given that expected supply net of Fed buying is set to rise sharply, we think the Fed will do so at the December FOMC meeting. Further, considering that a Blue Wave likely offers both a weakening USD and higher long-term rates, gold prices may find some relief in these offsetting forces," they state.
