Gold Price Forecast: XAU/USD vulnerable to a more hawkish Fed – TDS

Gold is challenging the uptrend, which has thus far supported prices year-to-date. Economists at TD Securities believe that the impact of inflation could leave the yellow metal vulnerable to a more hawkish Federal Reserve.

Growth shock could fade at a faster pace than the inflation shock

“ETF flows have been particularly supportive of gold in recent weeks, but these are likely highly correlated to safe-haven demand amid the war in Ukraine. Further, these flows are likely to be extremely correlated to the surge observed in comex gold flows, as money managers scoured for haven.”

“Participants could be expecting global central banks to ramp up their purchases following the West's aggressive sanctions on Russia, but official data have pointed to lackluster flows in recent months.”

“The market has started to discount a future in which the growth shock could fade at a faster pace than the inflation shock, leaving gold prices vulnerable to a more hawkish Fed profile that could open the door to a deeper consolidation.”