The cross-section of overnight precious metals returns is directly correlated to expectations for algorithmic buying activity for this session, TDS Senior Commodity Strategist Daniel Ghali notes.
“Platinum continues to benefit from signs of extreme asymmetry in CTA flows, with algo trend followers set to buy up to +17% of their net length this session alone. We still expect notable upside asymmetry to play out over the coming sessions, with even a flat tape likely to force CTAs to completely cover their books short by the middle of this week.”
“In a big uptape scenario, CTAs could even reaccumulate their effective 'max long' position size over the coming week, suggesting the set-up for flows still aggressively favors continued upside. We also expect Silver and Palladium to benefit from modest CTA buying activity, but Gold remains the stand-out in yet another sign that positioning has already reached extreme levels.”
“Macro fund positioning remains most vulnerable, but the window has opened for CTAs to return to the offer in the yellow metal in a big downtape. Interestingly, Shanghai traders are now selling their Gold positions from record levels, driven by fresh long liquidations.”
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