FXStreet reports that strategists at TD Securities apprise that the fundamentals behind gold purchases have not changed and investors are expected to flock to the yellow metal again despite some headwinds in the near-term.

“Risk assets are on fire amid the unprecedented scale of central bank support and global fiscal stimulus, despite still overwhelmingly negative sentiment – those selling gold in response to risk-on behavior in markets may be improperly discounting macro implications.”

“Risk-on behavior has been a significant contributor to money manager deleveraging in gold over the past weeks, but money managers have bought gold over the past few months in response to macro variables such as rates and break-evens. While this may suggest short-term headwinds for the yellow metal, it also argues that the underlying theme driving gold purchases has not changed – central banks remain committed to maintaining their monetary support for the foreseeable future.” 

“The combination of unprecedented support and firming growth will ultimately suppress real rates amid improving inflation expectations, suggesting investor interest will ultimately return to the yellow metal.”

FXStreet reports that analysts at Charles Schwab note that crude oil prices closed at a three-month high yesterday adding to their impressive recent gains as the front month July contract (CLN20) has rebounded from a 17.27 low on April 28 to a 38.18 high posted on Thursday. The 41.88 level provides resistance.

“With the trade expecting a 3.2 million bbl build in inventories, the EIA measured an actual draw of 2.10 million bbl. That buoyed prices yesterday despite some negatives in the products categories.”

“Market analysts maintain that most OPEC+ members are in favor of extending the current level of cuts for another month. Saudi Arabia may be pushing for an even longer extension of up to three months.” 

“The top of the sharp gap created on March 9 at 41.88 will offer near-term resistance. Beyond the 200-day moving average awaits at the 46.30 mark, followed by some old tops at 48.96. Selloffs will find first support at 35.38, followed by the 31.14 and 30.72 lows.”