TD Securities’ Bart Melek notes that weaker US jobs data and reduced odds of a 2026 Fed rate hike have driven Gold above $4,100/oz. The bank expects Gold to trend toward $4,280/oz near term, with support near $3,900/oz holding. However, lingering Oil-driven inflation risks are seen delaying any move toward the $5,300/oz target until next year.

Gold supported by softer Fed outlook

"With job creation activity weakening and oil prices falling sharply, there is little urgency to raise U.S. policy rates anytime soon. Lower energy prices and softer job growth suggest inflationary pressures are likely to ease in the months ahead."

"As long as an early Fed funds rate hike remains off the table, a break below the lower-bound support level of $3,900/oz is unlikely. Indeed, after prices rallied through resistance in the $4,050/oz to $4,126/oz range at the time of writing, we expect gold to establish a higher trading range."

"We are increasingly convinced that gold will trend up to $4,280/oz in the near term, with a low probability of breaching support near $3,900/oz. At the same time, lingering oil-driven inflation risks will considerably delay the expected rally to $5,300/oz."

"While we are not yet super bullish on the yellow metal due to lingering inflationary pressures and the risk that interest rates could still move higher, albeit a risk that has diminished recently, we believe spot gold is likely to rally only toward resistance at $4,280/oz."

"Furthermore, given that inflation is likely to remain stubbornly elevated and that oil prices may still move higher due to dangerously low and declining global inventory levels, we do not expect gold to reach our $5,300+/oz target until next year."

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