The ongoing geopolitical and macroeconomic instability is driving safe-haven fund flows into gold. Economists at TD Securities expect the yellow metal enjoy further upside amid this backdrop.

Hawkish Fed backdrop still poses downside risks

“So long as material progress on ceasefire talks and de-escalation remains elusive, haven flows are likely to keep the yellow metal propped up against an increasingly hawkish Fed backdrop.”

“The 2y-10y curve flirting with inversion has further fueled talk of recession on the horizon, offering another positive dynamic for the gold market.”

“Rates markets are readying for the Fed to deliver a hawkish surprise to markets. On this front, with markets only pricing in roughly a 73% chance of a 50bp move in May, there is still room for the market to price in the full move that we are expecting, which could increase macro outflow pressures for precious metals markets.”