Gold finds relief from tech recovery as flows remain firm - TD Securities

Declining leverage among systematic risk-parity funds, limited ETF outflows and Asian follow-up selling, and resilient speculative flows support the view that Gold’s recent fall reflected liquidity pressures and de-leveraging rather than a fundamental change in the longer-term bullish outlook, according to TD Securities’ Ryan McKay and Bart Melek. As the tech sector sell-off subsides, Gold has regained its footing, the analysts note, though the rebound remains modest.

Gold steadies after de-leveraging sell-off as flows hold firm

"An easing of the tech rout has seen gold find its footing to start the week."

"While the recovery is still very modest, and risks remain high that some investors who entered later in the initial rally may have less conviction, there is hope for the bulls that the washout was more liquidity driven than a capitulation of the longer-term bull thesis."

"Our model's measure of systematic risk-parity fund leverage has also started to decline in recent days, further supporting the view that this selloff was more of a de-leveraging event as opposed to a fundamental shift."

"So far, Asian follow-up selling and ETF outflows appear to be only modest, while our higher-frequency gauge of speculative flow strength remains strong."

(An Artificial Intelligence tool assisted in producing this article, which was reviewed by an editor. Find out more.)