US yields are pushing up as the Federal Reserve deepened their hawkish tilt. Economists at TD Securities see few participants left with appetite to buy gold

The right tail is narrow in gold

“Rates continue to reprice higher as the market pencils in another rate hike in 2022, pricing in ten additional hikes during the year, hinting at a larger overshoot of neutral.” 

“Comex shorts have largely been wiped out, removing some fuel for price strength, while safe-haven flows have a historical tendency to dissipate. ETF flows also have a historical relationship with macro forces which argue for easing inflows and for the potential for significant outflows if the Fed can indeed reach neutrality at a fast pace and slow inflation.”

“The tug-of-war in precious metals is rather associated with the Fed’s ability to do so, particularly given the slowing growth environment. With quantitative tightening only a few short weeks away, liquidity premia will continue to drive markets, but the threshold for significant CTA outflows remains elevated.”

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