Will Gold bugs manage to withstand this wave of selling activity? Price action over the past months has resulted in capitulation from macro funds and large-scale selling activity from systematic trend followers across nearly every commodity market on our radar, TDS senior commodity strategist Daniel Ghali notes.
“Gold is the notable stand-out, with both algos and macro funds still holding onto the bulk of their length, with aggregate readings of money manager positioning still sitting near cycle highs and with a unilaterally bullish consensus. However, Gold won't protect against a deleveraging event.”
“And, in Shanghai, signs of selling activity persist with the top traders continuing to shed some net length in the Yellow Metal. Under the hood, a trend of long liquidations has been only somewhat concealed by simultaneous short covering.”
“Looking forward, however, Shanghai traders' shorts are now trending near pre-pandemic levels, which suggests the scope for continued long liquidations to weigh on prices is more elevated, particularly when considering that physical traders are still on a buyer's strike.”
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