TD Securities predicts gold will top $5,000 an ounce by 2027

TD Securities believes that the room for gold to fall is limited, and the current market environment has met the conditions, which may once again push gold prices to exceed US$5,000 per ounce. (Bloomberg)

[Financial Channel/Comprehensive Report] The price of gold continues to face pressure. The price of gold fell below the key support of US$4,300 per ounce, making investors worried. However, TD Securities believes that the room for gold’s decline is limited. The current market environment has the conditions to push the price of gold to exceed US$5,000 per ounce again.

Ryan McKay, senior commodity strategist at TD Securities, believes in the latest market commentary that investment demand for gold fundamentals is still resilient. "The time for gold's next wave of gains is coming. Gold has demonstrated its ability to remain strong even in the face of interest rate hikes by the Federal Reserve. As demand from investors and central banks increases again, gold seems ready to move toward a price of more than $5,000 per ounce in 2027."

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TD Securities believes that rising geopolitical uncertainty, de-dollarization, concerns about currency devaluation, deteriorating fiscal conditions, and continued inflation concerns will continue to support investment demand for gold.

At the same time, MacKay pointed out that the market has already priced in expectations that the Federal Reserve will raise interest rates three more times. He said this creates asymmetric risks for gold, because if the Fed fails to meet market expectations for an interest rate hike, it may accelerate the rise in gold prices.

McKay further pointed out that bullish speculative positions are slowly improving as macro investors who adopt discretionary strategies and mainly bet on general economic trends have re-increased their net long positions since June. He said this wave of buying helped support gold through the early summer, and even as market expectations for higher interest rates increased, demand remained relatively resilient.

MacKay said renewed geopolitical concerns, stronger central bank demand and questions about the Fed's ability to control inflation initially helped drive those inflows. Recently, doubts about U.S. fiscal policy and currency depreciation have reheated, which has also allowed investors to continue to be interested in gold despite tighter monetary policy.

In an environment of increasing fiscal uncertainty, TD Securities believes that there is still room for further growth in gold investment demand. The bank estimates that the current discretionary investment position is still about 30% below the peak in 2022 and 50% below the estimated all-time high set in 2016.

In addition to increased investor interest, TD Securities also believes that central bank demand will provide another important support for gold prices.

For TD Securities, the combination of strong central bank gold purchases, improving ETF flows, relatively low speculative positions, and continued concerns about inflation, fiscal sustainability and currency devaluation mean that gold's current weakness may ultimately be temporary.

Even if the Federal Reserve maintains a tighter monetary policy stance, McKay said these long-term investment flows should allow gold to withstand the pressure of higher interest rates and launch the next wave of bullish moves; TD Securities expects gold prices to exceed $5,000 per ounce in 2027.

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