Gold prices remain in a strengthening downtrend, despite the recent respite afforded by the slump in USD. This trend is set to last, in the opinion of strategists at TD Securities.

The pain trade is still to the downside 

“The risk of capitulation remains prevalent for the yellow metal moving into October, with strong data continuing to point to a more aggressive Fed rate path ahead.”

While rates markets are increasingly discounting a higher terminal, we find that gold prices aren't pricing in the next stage of the hiking cycle. Historically, gold prices tend to display a systematic and significant underperformance in the latter stage of hiking cycles, as rates enter into restrictive territory.”

“Considering the increase in inflation's persistence this cycle, a restrictive regime may last longer than historical precedents with the Fed likely to keep rates elevated for some time, even as recession risks rise, which argues for a prolonged period of pronounced weakness in precious metals.”