TD Securities said positioning in gold has shifted as higher oil prices linked to the US-Iran conflict threaten to push inflation higher again. Markets have moved to price a Federal Reserve hike in late 2026, and the firm expects higher carry costs, yield-driven opportunity costs and a firmer US dollar to constrain the metal.<\/p>\n
The bank sees gold trading close to support at $3,900\/oz as speculative length continues to erode. Money managers have also cut long exposure in silver, with weaker industrial and investment demand expected to weigh on prices, leaving both metals\u2019 length on a weakening trajectory for now.<\/p>\n
We are seeing a major shift in the global macro landscape as the ongoing US-Iran conflict has pushed Brent crude oil prices past $110 a barrel, threatening to reverse recent progress on inflation. This energy-driven inflation spike has forced markets to price in a 65% probability of a Federal Reserve rate hike by December 2026. As a result, we recommend that derivative traders quickly reduce their bullish exposure to precious metals.<\/p>\n
Gold is currently clinging to key support at $3,900\/oz, and we advise buying short-term put options to profit from an expected break below this level. The combination of a rising US Dollar Index, which recently hit a fresh high of 106.8, and surging Treasury yields makes holding gold increasingly expensive. We expect speculative money managers to continue liquidating their long positions over the coming weeks, driving prices lower.<\/p>\n
Silver is in an even weaker position as recent manufacturing data reveals a 3% drop in global industrial demand, prompting fund managers to slash their net-long contracts. Derivative traders should target silver with bear put spreads or outright short futures positions to exploit this lack of support. We anticipate that silver’s decline will outpace gold’s, offering an excellent opportunity for short-biased pairs trading.<\/p>\n
To hedge against this shifting interest rate outlook, we suggest shorting short-term interest rate futures to align with the hawkish Fed repricing. The US 2-year Treasury yield has already climbed to 4.85% in response to the geopolitical premium in oil. Positioning for a stronger dollar and higher yields will protect portfolios as the market adjusts to this prolonged high-carry environment.<\/p>\n\n\n\n