Daniel Ghali, senior commodity strategist at TDS, observes that gold (XAU/USD) prices are lingering near record levels, but cautions that the accompanying narratives have grown stagnant. Ghali highlights a significant risk of a positioning washout, emphasizing that this risk currently stands at its peak for the year.
Ghali explains, “Macro fund positioning aligns statistically with the aggressive pricing of a 200 basis points cut by the Federal Reserve over the next twelve months in rates markets. CTAs are currently holding their ‘max long’ positions, while the threshold for signals indicating a downturn in the uptrend is steadily approaching.”
He further notes, “Asian flows have seen a notable decline, following a temporary pause in buying activity associated with a surge in purchases linked to changes in Indian duties. Although Shanghai trader positions remain close to historical highs, they are facing increasing pressures.”
Ghali underscores that various key players in the gold markets are showing signs of buying exhaustion, with the narratives that previously drove prices to their current peaks now appearing worn out. He concludes by underlining the heightened risk of a potential positioning washout, which he deems to be currently at its most elevated levels of the year.
