TD Securities: Gold Under Short-Term Pressure, Breakdown Below Two Key Levels Could Accelerate Selling

International gold prices have recently retraced some gains but remain relatively strong within the precious metals group. TD Securities analysts Ryan McKay and Bart Melek issued a new research report on Thursday (10th), stating that rising energy prices and heightened Federal Reserve (Fed) rate hike probabilities have not altered gold's relative performance against other precious metals.

The two analysts believe gold prices can still hold their elevated range for now, but upcoming data and news will dictate short-term movements, with inflation data being particularly critical.

TD Securities is closely watching two price levels: if gold falls below $4,367 per ounce, commodity trading advisors (CTAs) may turn into mild sellers; if it drops further below $4,300, systematic funds are more likely to engage in large-scale selling.

However, short-term pressure does not mean long-term momentum has disappeared. TD Securities notes that the resurgence of dollar depreciation themes, sustained high-level central bank gold purchases, and renewed accumulation in gold ETFs all provide support for gold prices.

In their report, McKay and Melek wrote: "Strong data and a hawkish Fed may only catalyze modest near-term selling, delaying the next upswing, rather than causing a meaningful downturn."

Fed Chair Powell's hawkish stance is a key short-term risk. Melek noted last week that Powell's hawkish tone at the global central bankers' symposium could become a major headwind for gold in the short term. He warned that inflation has not convincingly slowed, must return to the 2% target, and that current financial conditions are not restrictive. Rising energy prices and strong economic growth indicate underlying inflationary pressures remain. As a result, markets have adjusted rate path expectations, now pricing in Fed rate hikes this month and in December.

Melek believes gold could continue to decline in the short term even amid dollar weakness. The Fed's firm commitment to price stability causes markets to temporarily overlook dollar depreciation trades. With factors supporting gold weakening, prices may fall toward the lower end of the $4,200 to $4,700 range by year-end.

But the long-term outlook remains bullish. If oil markets stabilize, high interest rates suppress aggregate demand, and inflation steadies, the Fed could ease tightening to fulfill its dual mandate, particularly full employment. Melek forecasts this would support gold moving toward TD Securities' Q3 next year target of $5,350 per ounce, while central banks, institutions, and physical gold retail investors may also ignite the next rally after waiting for better entry points.