Gold: Upside capped by Fed hike risks – TD Securities

TD Securities’ Bart Melek notes Gold extended gains after the July Consumer Price Index (CPI) matched expectations, reinforcing a dovish narrative around Fed Chair Warsh. With prices near $4,434/oz and resistance just below $4,500/oz, Melek sees Gold staying near the upper end of a higher trading range. However, he argues it is still premature to call for a breakout toward $5,000/oz.

Fed path keeps gold contained

"With upside momentum driving prices to $4,434/oz and CTA buy triggers sitting near $4,468/ oz, the yellow metal may soon challenge resistance just below $4,500/oz."

"A decisive move above that level would likely require stronger confirmation that the Fed will not raise rates this year."

"As a result, gold will likely remain near the upper end of its current trading range, which has shifted meaningfully higher since July, though it is still too early to call for a breakout toward $5,000/oz."

"Until then, if it happens at all, the gold market should stay in the upper bound of the recent higher trading range."

"If no new inflation pressures materialize, gold is off to the races and a 5-handle is a very real possibility."