Chances of correction in Gold prices increase – TDS
27.08.2024, 14:01

Chances of correction in Gold prices increase – TDS

The Fed is in all likelihood going to cut rates in the next few weeks and everyone knows it, TDS Senior Commodity Strategist Daniel Ghali notes. This scenario is favoring Gold, but chances of a correction are increasing day by day, he says.

Downside risks for Gold are more potent

“Our gauge of macro fund positioning in Gold is now at the highest levels recorded in the depths of the pandemic. This red flag marked the local highs set in Sep 2019, and previously in Jul 2016. Symmetrically, extreme short positioning from this cohort marked the lows in 2018 and 2022.”

“This time around, CTAs are also max long and Shanghai traders' net length has also inched towards record highs. Algos are also vulnerable in silver, with most scenarios for prices pointing to selling activity on the horizon, barring a break north of $31.5/oz.”

“This set-up is the antithesis to the early-year dichotomy in positioning that helped to propel Gold on its trajectory towards current all-time highs. Downside risks are now more potent. The ship is crowded. In fact, it has scarcely been as crowded as it is today. Do you have a slot secured on the lifeboat?”

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