Current price $1400.

Gold’s rally is temporarily exhausted, and prices are likely to remain range-bound until a new wave of bullish sentiment takes the metal towards the $1,500 level, according to TD Securities.

5 Year Chart

Solid U.S. economic data will keep a lid on gold prices for the rest of the year with markets unable to price in an aggressively dovish Federal Reserve, strategists at TD Securities said on Monday.

“For much of the next six months, gold investors will likely bet that the Fed will reduce rates — but not as aggressively as the Fed Funds futures curve would suggest. Stable inflation and still decent US economic numbers are the key reasons why the US central bank is unlikely to convince traders that its time to go aggressively into simulative mode,” TD Securities head of commodity strategy Bart Melek and commodity strategists Ryan McKay and Daniel Ghali wrote.

Key support seems to be at $1,381/oz (38.2% fib of the 2011-2015 rout), with resistance near $1,440/oz,” the strategists noted.

TD Securities expects gold to remain around the $1,400 an ounce level for the rest of the year and then begin to climb, rising to $1,474 in Q4 of next year.

“Once equity correction risks and vols rise as U.S. data starts turning convincingly lower, low Fed rate expectations and insurance premiums should lift gold toward $1,500/oz in the final months of 2020,” the strategists wrote.

Key events to keep an eye on this week are the Fed Chair Jerome Powell’s testimony as well as the FOMC June meeting minutes. In our view, we continue to see a 25bp cut in July as our base case, which should keep gold prices trading near the $1400/oz mark for the time being,” TD Securities’ latest update stated.

“While markets initially responded positively to renewed hopes that the U.S. and China would return to the negotiation table, that hope was soon destroyed by weak economic data spreading from Asia to Europe, and emerging evidence that the U.S. economy is also slowing,” Melek, McKay, and Ghali wrote.