Gold is advancing above $1,860, eyeing a retest of the two-week highs of $1,870. But in the view of economists at TD Securities, selling rallies may be prudent for now.

Positioning is still tilted to the long end of exposure

“Higher wages and the drawing on savings are is helping to keep spending high, which suggests that since the Fed has little impact on the supply side, aggressive rate hikes may still be in order to tame inflation. As such, it may be much too early to get bullish on gold.”

“Given that positioning is still tilted to the long end of exposure, any signs that inflation will remain stubbornly high, or data pointing to a steadfast economy due to higher wages and the spending of savings, as seen today, Fed Funds estimates could easily move back to the highs seen at the start of May or even higher. This, along with modest liquidity which may decrease further with QT, volatility and repositioning could easily force gold to trend down to $1,840 and then to just below $1,800.”