A period of high deficits, slow growth, persistent inflation, currency devaluation and an impending cutback cycle has already drawn capital into the warm embrace of gold, notes Daniel Ghali, Senior Commodity Strategist at TDS.
Visible short positions remain near decade lows
“Macro funds’ positioning in Gold is at its highest levels since the depths of the pandemic. It is more statistically consistent with deep recession cuts than normalization cuts, or alternatively it may be inflated due to geopolitics, deficits, or any of the bullish narratives mentioned above.”
“What is clear is that macro funds have rarely held more gold than they do today, with our estimates now at levels that marked local highs in 2019 and 2016. CTAs are also effectively ‘max long’. Outflows from Chinese ETFs have resumed. Positioning by Shanghai traders near all-time highs already reflects the attractiveness of gold against a weaker domestic currency, and equity and property markets.”
“Asia is on a physical buyers’ strike. Visible short positions remain near decade lows. Narratives in gold markets are unanimously bullish. We see significant risks to the near-term outlook linked to positioning, despite the strong fundamental backdrop.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
