The current gold market is markedly different from a few months ago, according to TDS senior commodity strategist Daniel Ghali.
Limited Room for Further Gains
“Discretionary traders are maintaining larger positions than the rates market outlook for Fed cuts justifies, which appears somewhat optimistic. Commodity Trading Advisors (CTAs) now hold a ‘max long’ position, indicating little room for additional buying without a re-leveraging process,” Ghali noted.
While central bank purchasing is expected to continue, Asia’s appetite for gold remains subdued with only minimal signs of increased buying in recent sessions. This is partly due to price movements in Asian currencies, which have reduced the demand for precious metals as a hedge against currency depreciation.
Ghali also highlighted that although geopolitical risks in the Middle East may be providing a safe-haven bid for gold, the potential for further price increases is limited by current positioning dynamics. Without a more significant escalation of these risks or a deeper expectation of Federal Reserve rate cuts, substantial gains in the gold market are unlikely in the near term.
