Gold rallied all the way up to $1,920 in the last session of the week. However, strategists at TD Securities note that the yellow metal confronts correction risks.
Precious metal space is no longer in a selling mode
“Reflecting the narrative that inflation pressures in the US economy are coming under control, following the release of the December payrolls data which showed a more benign wage growth, money managers aggressively grew their long Gold exposure. The sharp increase in prices, which was a direct reaction to lower rates along the short end of the curve and weaker Dollar, has convinced investors that the yellow metal had upside.”
“While the precious metal space is no longer in a selling mode, there continues to be correction risk as it is not all certain that inflation has been defeated and that the US central bank is ready to get less restrictive anytime soon.”