GOLD PRICE FORECAST: XAU/USD COULD SURGE ABOVE $2,300 SOMETIME OVER THE NEXT SIX MONTHS – TDS

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Gold (XAU/USD) could trade well above the $2,300 level for a time next quarter, strategists at TD Securities say.

Positioning, Fed credibility angst are catalysts for Gold upside

Lower policy rates are set to send real rates, carry and opportunity costs sharply lower, which should bring speculative and ETF investors back in. This will very much work in tandem with physical markets and relative positioning, which is skewed to the short end, to bring Gold above $2,300 for a time later in the year.

The strong likelihood that the US monetary policy makers will start cutting before inflation reached the desired level suggests that long-term investors, who have an interest in wealth preservation, may boost portfolio weightings of Gold.

Cutting rates before the two percent inflation target is reached may well convince many in the Gold market to hedge their long-term purchasing power. They may question the credibility of the Fed's commitment to the current inflation target. The potential of a US election outcome, which elects politicians who want to cut taxes and grow spending at the same time, may also be a reason investors and central banks continue to buy physical Gold


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