NEW YORK (Scrap Register): TD Securities said that a rout in gold and silver are not in the cards even though both metals could ease some more due to expectations for the U.S. Federal Reserve to tighten monetary policy next week.
As such, the interest in gold was largely gone after the price failed to break through its 200-day moving average resistance near $1,261 an ounce, as specs likely started to take profit in response to the increasing conviction the U.S. central bank will restart the tightening cycle.
With ideas that the FOMC may be moving from two to three hikes in 2017, gold and silver are susceptible to further downward corrections.
“But since the world is facing numerous risks ranging from potentially destabilizing European elections, to trade/currency wars with China and Mexico, to the President Trump's inability to deliver on his fiscal agenda, we don’t expect a rout,” said analysts at TDS.
In fact, the Fed is only likely to remove accommodation and will not seek to follow a restrictive monetary policy. And, there is the risk that the market may see the U.S. central bank to be behind the curve, if the Trump agenda goes through, growth remains firm and the central bank exercises caution. 
To that point, while the last two times the FOMC raised rates gold reacted negatively in the run-up to the announcement, it rallied afterward, TD Securities added.