Gold: Pressure Eases on Tech Rebound as Flows Stay Firm - TD Securities

Gold’s recovery remains modest. TD Securities’ Ryan McKay and Bart Melek say the metal has regained its footing as selling pressure in the tech sector subsides. In their view, liquidity pressures and de-leveraging explain the recent decline better than a fundamental change in the longer-term bullish outlook. They cite reduced leverage at systematic risk-parity funds, modest ETF outflows and follow-up selling in Asia, alongside resilient speculative flows.

De-leveraging Drives Selloff, Flows Hold Firm

"An easing of the tech rout has seen gold find its footing to start the week."

"While the recovery is still very modest, and risks remain high that some investors who entered later in the initial rally may have less conviction, there is hope for the bulls that the washout was more liquidity driven than a capitulation of the longer-term bull thesis."

"Our model's measure of systematic risk-parity fund leverage has also started to decline in recent days, further supporting the view that this selloff was more of a de-leveraging event as opposed to a fundamental shift."

"So far, Asian follow-up selling and ETF outflows appear to be only modest, while our higher-frequency gauge of speculative flow strength remains strong."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)