Gold has held strong as what appeared to be notable progress on ceasefire talks has since been walked back. Nonetheless, strategists at TD Securities highlight the downside risks that are still in place for the yellow metal.

Gold will have to contend with macro outflows associated with a hawkish Fed

“Headlines suggest Russia is even sending new forces, further emboldening the safe-haven flows into precious metals. At the same time, the 2y-10y curve flirting with inversion has further fueled talk of recession on the horizon.” 

“While geopolitical tensions and yield curve recession signals re-ignite investor interest in gold, downside risks still remain amid a hawkish Fed backdrop and as negotiators continue to work towards a ceasefire.”