TD Securities sees weaker dollar as key driver of gold demand this year

Last year, central banks were the major gold buyers. But now the main driver has switched to dollar depreciation and risk-off sentiment, Daniel Ghali of TD Securities believes.

This year started with the US currency's relentless firming, and financial regulators of countries, wishing to diversify away from the greenback, used this moment to purchase the yellow metal. However, since then, the dollar has weakened, making gold an attractive asset for investors. Its price tends to exhibit an inverse relationship with the US currency and the Fed's interest-rate, the expert explains.

Ghali also denies the relationship between the slump in Bitcoin and the increase in demand for the precious metal. In his opinion, the current outflows from Bitcoin ETFs are only due to a drop in investor interest in risk assets.

In addition, the expert notes favorable market conditions for silver price growth. Due to the structural deficit, silver's price dynamics will soon accelerate, catching up with gold’s performance, Gali believes.