TD Securities said gold is entering a fresh bullish phase as speculative positioning, ETF flows and central bank demand provide support even with further US rate rises. The bank pointed to resilience during Federal Reserve tightening, alongside de-dollarisation themes and stronger Chinese buying, as factors underpinning a potential sustained break higher in spot prices.
The firm flagged that three additional Fed hikes are already priced in, implying that any shortfall versus that path could boost gold. It also said there remains scope for market participants to add length, while CTA flows have recently been net-negative as systematic funds cut modest longs ahead of the September FOMC. With momentum positioning described as “fairly clean”, TD Securities expects discretionary buying to re-energise the rally, and sees central bank accumulation continuing through 2027, with spot gold potentially moving above $5,000 an ounce.
Derivatives Strategies For The Next Gold Breakout
We believe derivative traders should aggressively position for a major gold breakout in the coming weeks by utilizing long call options or bull call spreads. With spot gold currently consolidating near the $2,750 level, the market is building a powerful base to launch toward $5,000 by 2027. This derivatives strategy allows us to leverage the next leg higher while defining our risk against any brief market pullbacks.
Robust Demand And Strategic Positioning
Our conviction is backed by recent World Gold Council data showing that global central banks purchased a massive 483 tonnes of gold in the first half of this year alone, maintaining a historic pace of de-dollarization. Furthermore, gold exchange-traded funds (ETFs) have reversed years of outflows, turning net positive over the last two quarters as institutional investors seek a hedge against sovereign debt. This dual engine of official-sector and private-sector demand ensures that any downside in the yellow metal remains heavily protected.
From a positioning standpoint, systematic trend-followers and Commodity Trading Advisors (CTAs) have recently liquidated their long positions, leaving the market’s positioning remarkably clean. This means there is massive sidelined capital ready to chase the market higher as soon as macroeconomic momentum shifts. We should capitalize on this clean slate by acquiring long futures contracts and call options before the next wave of momentum buyers triggers a short squeeze.
