Commodity analysts at TD Securities (TDS) report that Commodity Trading Advisors (CTAs) are currently at “max long” positions in both gold and silver. However, Daniel Ghali, a TDS analyst, warns that the risk of algorithmic liquidations in gold remains significant.
Ghali notes that there are no directional short positions currently held in gold markets. He states, “This situation presents a significant challenge to the prevailing consensus narrative that has drawn substantial capital, leading our measures of positioning to indicate extreme levels across various fronts. Yet, liquidations have been minimal, suggesting that geopolitical uncertainties are preventing accounts from unwinding their positions.”
Despite the recent price movements, Ghali emphasizes that the past weeks have not seen substantial inflows into gold. Instead, TDS’s positioning analytics indicate a liquidity vacuum, characterized by a lack of sellers in the market.
Ghali also highlights that money manager short positions are predominantly linked to Exchange for Physicals (EFPs), indicating that there are nearly no directional shorts remaining in the gold markets. In contrast, while silver exhibits a smaller margin of safety against potential selling pressure, it could present a more attractive opportunity if early signs of reflationary trends continue to develop. In such a scenario, silver and other base metals may serve as a superior investment expression.
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