Precious metals: Downside correction before rally resumes – TDS

Gold made new highs as yields plummet to the zero-bound and equities come under pressure once again. Equity sell-off may liquidate gold positions to generate liquidity, in the opinion of analysts at TD Securities. XAU/USD trades at 1683.76.

Key quotes

“The persistent equity sell-off could see money managers liquidate gold to generate liquidity in the near term. Notwithstanding near term rushes to liquidity, positioning is becoming stickier at higher levels as further rate cuts globally offer fundamental backing, suggesting the precious metals rally is here to stay.” 

“An explosion at Anglo American Platinum converter plant has caused the company to issue a force majeure and reduce guidance by 3.3-3.8m oz for 2020, offering supply side support for the industrial precious metals which had come under pressure. With that said, CTA selling in platinum could come to halt, with prices above $903/oz signaling a flip of bearish signals.”