TD Securities Sets $1900 Price Target on Gold

Siamak Masnavi
  • 21 Apr 2020

On Monday, Canadian investment bank and financial services provider TD Securities said that it expected the price of gold to reach $1,900 an ounce within the next three months.

According to a report published on Monday (April 20) by Kitco News, the latest trading call by TD Securities set a $1,900 per ounce price target on gold, and explained why its analysts were bullish on gold:

"We buy gold at $1,710/oz, targeting $1,900/oz in anticipation of continued growth in investment demand amid massive and prolonged unconventional central bank stimulus."

According to data by TradingView, currently (around 08:10 EST or 12:10 UTC on April 21) spot gold is trading at $1670.59, down $24.12 (or 1.42%):

gold chart on 21 Apr 2020.png

Gold is up 9.43% against USD in the year-to-date (YTD) period.

Per Kitco's report, TD Securities' "Long Active Gold Futures" call has "an entry of $1,710 an ounce, a target level of $1,900 an ounce, stop-loss of $1,625 an ounce, and an expected horizon of three months."

TD Securities' Head of Global Strategy, Bart Melek, and one of its commodity strategists, Daniel Ghali, had this to say:

"The Fed's latest QE program is now the largest on record.

"Of course, there is a well-known relationship between QE and lower real rates, such that it ultimately suppresses real rates by lifting inflation expectations at a faster pace than nominal rates …

"The Fed and other central banks are likely to keep their uber-easy policies in place for far longer than anticipated, following a decade of below-target inflation and a newfound interest in asymmetric inflation targeting."

They went on to add:

"Despite the bullish outlook, dry-powder analysis suggests only a modest bullish tilt, while CTA positioning remains subdued given their vol-targeting nature.

"Consensus analyst forecasts remain below spot prices, despite positive sentiment, strengthening the argument that the market is underestimating the potential impact on gold.

"We expect investment demand to rise as liquidity returns."

Before gold can go much higher, Melek says that we need to see "a bit of economic stability" in the U.S., after which inflation could drive the gold price higher. 

As Coindesk reported late last month, interest in gold-backed crypto tokens, such as PAX Gold (PAXG) and Tether Gold (XAUT), continues to go up as physical gold in the form of bullion coins or small gold bars becomes increasingly harder to find due to the restrictions in place as a result of the COVID-19 pandemic.

 Roy Sebag, founder of precious metals custodian Goldmoney, told Coindesk:

"The Fed completely changed the rules – the real rate of interest swung even more and so we are seeing all that money flow into gold immediately."

According to a press release shared with CryptoGlobe, stablecoin Tether Gold, which can be bought or sold 24/7/365, had a market capitalization of roughly $50 million as of March 31. 

Tether CTO Paolo Ardoino, had this to say:

"People like owning gold through Tether Gold because of the control and accessibility that Tether Gold offers."

"As a blockchain-based token that enables you to hold gold without annual fees, Tether Gold will grow from strength to strength. 

"Tether Gold will undoubtedly establish itself as the dominant digital token representing gold ownership."

Gold Price Chart Courtesy of TradingView