TD Securities states that although gold is under pressure amid high energy prices and rising expectations of Fed rate cuts, it remains relatively strong compared with other precious metals. However, the bank warns that if gold prices break below key support levels, commodity trading advisors (CTAs) and large funds may accelerate sell-offs and amplify short-term declines.

Two Support Levels Become Critical

In a report released on Thursday, TD Securities commodity analysts Ryan McKay and Bart Melek wrote that gold has given back some of its recent gains but still leads the broader precious metals complex. The analysts noted that gold has managed to hold support at higher ranges even as the market faces renewed pressure from climbing energy prices and rising odds of Federal Reserve rate hikes.

They pointed out that gold will remain "highly sensitive" to upcoming data releases and news headlines in the short run, with inflation data serving as the next major catalyst. TD Securities highlighted two key support levels: a drop below $4367 per ounce will prompt CTAs to turn moderate sellers, and a further breach of $4300 could trigger significantly heavier selling pressure from systematic funds.

Long-Term Support Remains Intact

Despite short-term pullback risks, TD Securities believes the fundamental long-term support for gold remains solid, including a revived "dollar depreciation" trade, peRSIstently high central bank gold purchases, and renewed inflows into gold ETFs.

The bank added that even strong economic data and a hawkish Fed stance may trigger near-term selling, which is more likely to delay gold’s next upward move rather than spark a substantial downturn.

Powell’s Remarks Weigh on Gold

In a more detailed analysis published last week, Melek said Federal Reserve Chair Jerome Powell’s hawkish remarks at the Jackson Hole symposium are expected to exert notable short-term pressure on gold. Powell warned that inflation has not convincingly slowed, and policymakers need to ensure inflation returns to the 2% target, calling this goal "firm and fixed". He also stated that current financial conditions are not restrictive.

Melek noted Powell’s view that current data is insufficient to bring down elevated PCE and CPI inflation readings. With energy prices rising and the economy still resilient, core forces pushing overall prices higher remain in place.

He said the market interpreted these comments to mean the US central bank is more likely to maintain higher policy rates in September and December, a marked shift from expectations before Powell’s speech. Higher short-term rates and a stronger dollar drove gold down roughly $125 to near $4470 per ounce. Melek said this aligns with TD Securities’ view from previous weeks.

Price May Retest Lower End of Range Within the Year

Melek believes gold may slide further in the short term even if the dollar stays under pressure. He wrote that the Fed’s reaffirmation of its commitment to price stability and its view that monetary policy remains the most effective tool to achieve this goal means the "dollar depreciation trade" narrative may temporarily lose market traction.

He pointed out traders had bought gold earlier because the US Treasury’s interventions in the long-dated bond market eased financial conditions. However, as front-end interest rates rise, the improvements brought by the Treasury’s liquidity operations on the long end may be offset. Gold could fall back toward the lower bound of its recent $4200–$4700 per ounce range by year-end.

Melek also said the Fed Chair appears slightly more hawkish than he was back in July. The US economy remains relatively resilient while inflation stays above target, and the market is starting to price in potential rate hikes in both September and December. Nevertheless, once inflation stabilizes amid a more balanced oil market and higher rates weighing on aggregate demand, the Fed will gain more confidence to reverse its tightening cycle to meet its full employment mandate. This will support gold toward its target of $5350 per ounce in Q3 2027.

He added that central banks, institutional investors and physical retail buyers may act as catalysts for gold’s next upward move, as these investors still view gold as an attractive portfolio diveRSIfier and may be waiting for better entry points.