【TMGM Financial Recap】Gold May Test the 4200 Level in the Short Term, Expected to Reach $5000 by 2027!
In its latest commodity strategy report, TD Securities pointed out that despite the recent weakness of the US dollar, the gold market still faces significant short-term downward pressure. After Fed Chair Kevin Walsh sent a strong hawkish signal, the market's repricing of monetary policy has become the core factor driving gold prices, causing the traditional USD-gold correlation logic to decouple at this stage.
At the Jackson Hole annual meeting, Wash reiterated the Fed's firm determination to bring inflation back to the 2% target. He made it clear that the current financial environment has not yet reached a tightening level, and signs of cooling inflation are not yet clear. As a result, the market quickly revised its previously optimistic expectations, and current pricing reflects the possibility of Fed rate hikes in September and December this year. This shift in expectations has significantly pushed up short-term U.S. Treasury yields, causing gold prices to remain under pressure recently, fluctuating around $4,430.
The current challenge for gold investors lies in shifting the driving factors. In the past, investors tended to seek safe-haven support for gold through dollar depreciation trades, but as the Federal Reserve strengthens its price stabilization responsibilities, this narrative is gradually marginalizing the market. In other words, in an environment dominated by expectations of rising interest rates, a weaker dollar alone is no longer sufficient to provide an effective rebound for gold prices.
From a deeper bond market logic, although the U.S. Treasury's intervention in the long-term bond market has somewhat eased financial tightening pressure and previously supported gold, this force is now insufficient to offset the heavy pressure caused by rising short-term interest rates. Based on this, TD Securities expects that by the end of this year, gold prices may further move toward the lower boundary of the $4,200 to $4,700 trading range.
However, this short-term pain does not mean the end of the long-term bull market logic. Institutions continue to maintain a long-term bullish outlook on gold and have set ambitious targets of reaching $5,350 in the third quarter of 2027. This long-term logic is based on the assumption that inflation will eventually stabilize and the oil market will return to balance. When the high interest rate environment begins to substantially suppress aggregate demand, the Fed will gain more policy space to reverse the tightening cycle and fulfill its duty to maintain full employment. Once this policy inflection point is established, strong demand from central banks worldwide, institutional investors, and physical retail buyers will jointly drive gold prices into a new round of structural gains.
Market Insight:
Gold continues to decline on the 4-hour level, with the MACD double lines and volume bars converging below the zero axis diverging from the bottom. The market remains highly focused on policy directions during Trump's term and the Fed's next moves. Investors are watching the upcoming nonfarm payroll data and inflation data, which will determine whether gold prices stabilize within the $4,200 support range.
