TD Securities commodity strategists expect gold and silver to face further near-term downside. They link this to the Middle East war keeping inflation expectations high and pushing back US Federal Reserve rate cuts.
Higher prices for energy, fertiliser, and chemicals are cited as factors that could make early rate cuts less likely. This, in turn, keeps the opportunity cost of holding precious metals elevated.
Near Term Downside Pressures
The strategists also point to reduced Middle East capital flows into the gold market as an added headwind. They expect conditions to improve once the conflict ends and energy price shocks fade.
They forecast that, after rates move lower and the US dollar weakens, gold could rise again later in the cycle. They project gold returning above $5,000 in the latter part of 2026.
In the near term, we see gold and silver facing a continued correction. The ongoing Middle East conflict is keeping inflation expectations elevated, which will likely delay any plans for the Federal Reserve to cut interest rates. This makes holding non-yielding assets like precious metals less attractive for now.
The March 2026 inflation data, which showed the Consumer Price Index remaining stubbornly high at 3.9%, supports this view. With Brent crude oil consistently trading over $110 a barrel due to supply chain fears, the Fed has little room to ease policy. This high interest rate environment increases the opportunity cost of holding gold instead of income-generating assets.
Options Based Trading Approaches
For traders using derivatives, this suggests buying put options on gold and silver exchange-traded funds could be a viable strategy for the coming weeks. This approach allows for participation in any downside move while defining risk to the premium paid. It is a direct way to position for the expected price pullback.
Another strategy to consider is selling out-of-the-money call options. This can generate income if prices move sideways or drift lower as the market waits for a geopolitical resolution. The absence of typical capital flows from the Middle East into the gold market further supports a stagnant or bearish short-term outlook.
We remember how market sentiment in late 2025 was positioned for significant rate cuts this year, a narrative that has been completely upended by recent events. While the immediate outlook is cautious, we see this as a temporary headwind. We still project that once the conflict subsides and the dollar weakens, gold will return to a path toward the $5,000 level later in 2026.
