FXStreet notes that gold has reversed an early dip to the $1770 area and is now trading near daily highs at $1785. Strategists at TD Securities note the yellow metal is sold in response to risk-on, just to recover gains shortly after. 

“In precious metals, nearly every trading session in the past few months has a sense of déjà vu, as traders aggressively sell the yellow metal in response to risk-on, only to see gold grind higher shortly after. This trading behavior is entirely consistent with our market thesis – gold is the midst of a regime shift, transitioning from trading as a safe-haven asset to an inflation-hedge product.”

“Long-term inflation expectations are rising in sync with risk-on behavior, while rates-vol remains deeply constrained amid uber-supportive policy, fueling a process that weighs on real yields. With 10y breakevens continuing to print new post-Covid highs, the normalization in inflation expectations may remain a powerful driver lifting gold prices deeper into $1,800/oz territory.” 

“Looking forward, the world-war era fiscal and central bank stimulus, the change in the central bank template that will incorporate 'symmetric inflation targets' and unwinding globalization, also suggest that inflation-hedge assets may grow in popularity.”