The gold price dipped further on Tuesday, but TD see supportive factors for it. In brief from a longer note:
- The potential for a protracted war in Ukraine simultaneously raises both geopolitical uncertainty and inflation risks, fueling demand for the yellow metal as a safe haven.
- This trend has also likely been exacerbated by the concurrent decline in global equity and bond prices, which is consistent with fears that Treasuries may be less potent havens in a higher-inflation regime.
- While the Fed is signaling its intent to combat inflation by reaching policy neutrality by year-end, and starting an aggressive QT regime, outflows from gold markets have been scarce as participants are happy to retain some optionality against the Fed's stated plan amid growth concerns.
Gold update:
