Gold: Fed risks and Dollar strength cap upside – TD Securities

TD Securities’ commodity strategists, led by Bart Melek, note that Gold investors have sharply reduced long exposure as higher Oil prices from the US‑Iran conflict threaten recent disinflation progress. With markets increasingly pricing a late‑2026 Fed hike, higher carry and opportunity costs alongside a firmer US Dollar are expected to keep Gold near support around $3,900/oz, with speculative length likely to erode further.

Higher yields weigh on bullion positioning

"Gold investors aggressively cut their long exposure as it became apparent that the escalating US-Iran conflict will continue to keep oil prices at very elevated levels, which is set to reverse recent progress made on inflation."

"With the energy complex likely driving aggregate prices higher in the coming months, the market is increasingly pricing a Fed hike towards the end of the year."

"The resulting increase in carry costs, yield-driven opportunity costs and a firming US dollar will likely keep gold prices near support at $3,900/oz."

"Money managers have also reduced their long silver exposure, which will apply downward pressure on prices due to weakening industrial and investment demand."

"As such, both silver and gold length are likely to erode for now."