TD stopped out of gold as prices drop below $1,790 an ounce
TD Securities is the latest bank to throw in the towel as the bank announced Wednesday that they were stopped out of their long-gold trade as prices dropped below $1,790 an ounce. April gold futures last traded at $1,771.40 an ounce, down 1.5% on the day.
"Our long gold trade was a casualty of the change in regime, from inflation-hedge product to safe-haven asset, resulting from the Fed's pragmatic approach to the rise in rates," the analysts said in their research note.
The Canadian bank noted that there is still a high level of bullish speculation in the gold market, and with bond yields rising, there is a risk of further liquidation, which could continue to weigh on the precious metal.
Although the bank has exited its gold trade, they have not updated their forecasts. The bank still remains bullish on the precious metal in the long-term, seeing the potential for prices to rise to $2,000 an ounce.
"The output gap will be very large for a prolonged period, and real rates will need to remain firmly in an accommodative mode for the U.S. economy to recover post-pandemic. This may be good news for gold, with $2,000/oz sill in the cards," the analysts wrote in a report at the being of the month.