TD Securities strategists note that Precious Metals, particularly Gold, are struggling to gain traction as elevated Fed hike probabilities keep real rates high. CTA's (Commodity Trading Advisors) are running a small net short and scenario analysis points to a relatively tight trading band. A fragile Iran deal backdrop and firm energy prices mean Gold is not yet in a clear recovery phase.

CTA shorts and constrained trading range

"Precious metals still can't catch a bid. Despite headlines driving oil lower, rates and probabilities of Fed hikes remain elevated, limiting the upside for gold."

"For now CTAs remain comfortable at a small net-short, with our pricing simulations highlighting a tight range under most scenarios."

"If potential deal talk keeps oil under wraps in the near-term, the worst case scenario of testing the next selling triggers just below the key $4000/oz level may be avoided for now."

"However, the still fragile deal framework and elevated energy pricing suggest precious metals are not fully out of the woods just yet."

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