Gold prices are maintaining their position near all-time highs despite recent pressure. According to Daniel Ghali, Senior Commodity Strategist at TD Securities (TDS), the current market setup may lead to significant CTA (Commodity Trading Advisor) selling activity in the coming week, especially with the upcoming Nonfarm Payrolls (NFP) data release potentially injecting volatility.
Gold Remains Stable as Market Eyes NFP Data
The gold market has remained rangebound close to its record highs, a situation that Ghali notes could trigger CTA selling if prices dip below $2,450 per ounce in the near term. “This scenario is particularly timely with the NFP data set to be released, which could introduce volatility into the markets,” Ghali commented. TD Securities anticipates a 205,000 increase in job numbers, which may impact gold prices.
Ghali further explained that while CTAs are expected to sell only a fraction—about 10%—of their maximum position size if gold prices fall below the $2,450 mark, this could signal a shift in market dynamics. The positioning signals are already showing red on multiple fronts, suggesting that CTAs might be the first to react to a changing market environment.
Extreme Macro Fund Positioning and Potential Gold Outflows
Macro fund positioning is approaching historical extremes, according to TDS’s gauges. Despite the current consensus outlook, Ghali pointed out that a scenario where rate cuts lead to a soft landing might not necessarily benefit gold. “In such a context, capital could shift away from gold towards more productive investments,” he noted.
As the market prepares for potential volatility driven by the NFP report and broader economic indicators, gold traders should be vigilant for signs of CTA activity and shifts in macro fund positioning.
