Gold remains firm in the aftermath of another strong jobs report. Talk of war crimes and the potential for more sanctions are set to keep haven flows particularly strong, strategists at TD Securities report.

Hawkish Fed backdrop is increasingly weighing on the upside momentum of gold

“Aside from geopolitical flare-ups, the focus for the precious metals market this week will shift toward the FOMC minutes and clues surrounding balance-sheet runoff, which we expect will be announced at the May FOMC. In this sense, while safe-haven appetite and massive ETF inflows provide a strong offset, the drag of a hawkish Fed backdrop is increasingly weighing on the upside momentum of the yellow metal.” 

“So long as material progress on ceasefire talks and de-escalation remains elusive, haven flows are likely to keep the yellow metal supported.”

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