Gold plunged on Monday to a new two and a half year low around $1,620. A combination of factors are set to add further downside pressure on the yellow metal, strategists at TD Securities report.

Higher interest rates to persist for some time

“With the yellow metal trading below pandemic-era levels, a small number of family offices and proprietary trading shops are increasingly feeling the pressure to finally capitulate on their massively bloated and complacent length in gold.” 

“Rates markets are now pricing the potential for higher interest rates to persist for some time, and a steady stream of Fedspeak is likely to hammer this point home. In this sense, our analysis suggests gold prices could still have further to fall in the next stage of the hiking cycle.” 

“The increase in inflation's persistence suggests that a restrictive regime may last longer than historical precedents, which argues for a more pronounced weakness.”