Gold Price Forecast: XAU/USD to suffer a substantial drop on a break below $1,914 – TDS

Gold bugs could find themselves offloading length in a vaccuum. A break under the $1,914 mark would leave XAU/USD vulnerable to further downfalls, strategists at TD Securities report.

Massive impulse in gold demand could be coming to an end

“The massive impulse in gold demand from ETF and comex flows could be coming to an end, in line with historical analogs as safe-haven flows tend to be short-lived. However, the bar is also razor thin for substantial trend follower liquidations in gold, while consumer demand is now showing signs of weakness following the surge in prices. 

“While a coordinated buying impulse from a broad group of gold traders had helped gold prices rise dramatically in past weeks, we could now see a coordinated reversal in flows. To start, a break below $1914/oz would catalyze a substantial selling program.”

“If the market has started to discount a future in which the growth shock could fade at a faster pace than the inflation shock, as we expected, then gold prices could be especially vulnerable to a more hawkish Fed profile, opening the door to a deeper consolidation.”