The Federal Reserve decided to hike its policy rate by 50 basis points (bps) as expected. As a result, gold rallied. Nonetheless, economists at TD Securities do not expect the race higher in the the yellow melta to last long.

There are not many participants remaining with appetite to buy gold

“The Fed largely met expectations, catalyzing a buy-everything rally given the pervasively poor sentiment across global markets amid well-telegraphed move. While Chair Powell took 75bp hikes out from consideration, the deck was stacked for this outcome from a positioning lens.” 

“Price action is playing out according to our playbook, which also notes that there aren't many participants remaining with appetite to buy gold, with only a few participants short. The consensus trade is to the long side, with some complacent gold length still associated with the war in Ukraine.”

 “The few remaining shorts hold a large position size and are likely to take profit as prices rise, fueling the ongoing rally in gold amid the buy-everything trade. However, we suspect that the rally won't last long in the yellow metal, considering that the breadth of traders short remains near its lowest levels on record.”