Gold prices continue to surge to unprecedented levels, according to Daniel Ghali, Senior Commodity Strategist at TD Securities.
Market Insights: Despite the bullish trend, trading activity among Shanghai traders has decreased from record highs. Ghali observed, “While some buying activity is evident, the sources remain unclear. Current data shows modest outflows from broad commodity funds and a sustained trend of withdrawals from Chinese gold ETFs. Overall, Shanghai trader positioning has stabilized after its peak.”
Ghali also noted a paradox: “Participants seem reassured by central bank purchases, yet official global central bank flows are now trending toward their lowest levels in five years, based on a six-month moving average.” In the Comex Gold market, non-commercial ‘directional short’ positioning has nearly vanished after recent short-covering activities.
Positioning Trends: Ghali reported that their latest assessment of macro fund positioning is slightly below historical peaks, with Commodity Trading Advisors (CTAs) positioned at maximum long levels. He highlighted, “There are only minor inflows into popular Western gold ETFs, along with indications that risk parity and volatility-targeting funds are beginning to relever.”
As gold prices continue to climb, these dynamics suggest a complex interplay of buying and selling pressures, influenced by both institutional behavior and broader market sentiment.
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