The strong US inflation print has catalyzed a meaningful breakout in gold prices. Strategists at TD Securities believe that the yellow metal is set to extend its advance on a close above the $1,860 level.

The breakout in gold has attracted new buyers

“The breakout has driven the China Smart Money group of funds to add a significant amount of new length in SHFE gold. Considering that Shanghai gold net length remains near multi-year lows, a change in sentiment, potentially driven by the technical breakout, could attract a significant amount of buying interest from this cohort.”

“With US real yields plummeting, the tides could sway the persistent waves of ETF sellers to add length.”

“Gold prices need only close north of $1,860/oz to catalyze further CTA long acquisitions, which should cement a more supportive trend.”

“After all, our ChartVision framework, which stress-tests 75 technical indicators to identify the critical threshold for a change in trend, suggests that with gold prices north of $1,845/oz, an uptrend in gold should form by March 2022.”