Gold: How is the tech rebound easing pressure as flows remain resilient? - TD Securities

Gold is regaining stability as selling pressure in the tech sector subsides, but the rebound remains limited, according to TD Securities’ Ryan McKay and Bart Melek. Rather than signalling a fundamental change in the longer-term bullish outlook, the analysts suggest the recent fall largely reflected liquidity pressures and de-leveraging. Supporting that assessment are reduced leverage at systematic risk-parity funds, modest ETF outflows and follow-up selling in Asia, alongside resilient speculative flows.

Do Resilient Flows Point to a De-leveraging Selloff?

"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."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Learn more.)