(Kitco News) The gold market selloff is nearly done, and prices will be heading to new all-time highs next, said TD Securities, which activated a new long gold trade at $1,994 with a target of $2,150.

"We long active gold at $1994/oz, anticipating imminent selling exhaustion in precious metals and rising discretionary interest to support the yellow metal towards new all-time highs," said TD Securities senior commodity strategist Daniel Ghali.

After testing record highs two weeks ago, the gold market fell, with June Comex gold futures last trading at $1,986.30. This is nearly $100 lower since testing those record highs at $2,085 on May 4.

"Our positioning analytics argue that selling exhaustion in precious metals could be imminent, barring margin calls associated with a debt-ceiling catastrophe," Ghali said Tuesday. "The bar for algorithmic liquidations in gold to pressure prices is elevated, whereas Shanghai trader length is nearing year-to-date lows. Further, dry-powder analysis highlights that position sizing for gold bulls remains near average levels, which points to less pain associated with the recent pullback."

Evidence suggests that gold bulls still have some trading flows to invest and push prices higher.

"We expect discretionary capital to flow towards gold given strong historical linkages with market expectations for a deepening Fed cutting cycle over the next year. Gold prices may well be near all-time highs, but the positioning set-up remains inconsistent with a cycle peak," Ghali noted.

The new peak TD Securities is waiting for is $2,150, which it sees gold reaching towards the end of the year.

"Discretionary traders may play a large role in helping gold prices firm, given we expect markets to price in a deeper cutting cycle over the next 12 months," Ghali explained. "We expect gold to print new cycle highs over the coming months."

In the past week, gold suffered from a widening gap between market expectations and what the Fed's dot plot says, TD Securities global head of commodity strategy Bart Melek told Kitco News.

A conflicting narrative is developing between the Fed signaling a pause in June and some Fed officials still remaining hawkish.

The Fed rate hike expectations might remain in limbo until the new Fed dot plot is released at the June meeting, said Melek. "There is strong support at around $1,965. We still expect $2,150, but that won't be sustained until the later part of the year when it becomes more certain that the Fed will ease," he noted.