The week ending September 13 saw bearish flows in the gold market. In the opinion of the strategists of Société Générale, the yellow metal is highly vulnerable to short covering.
Further rate hikes ahead, which is bearish for gold
“The complex experienced an unusual crosswind in flows as silver posted a $1.6bn upflow vs. a $2bn downflow for gold. This is the fifth week of bearish flows for gold As such, gold is extremely vulnerable to short hedging as current short positions are above the 90th percentile for the past two years.”
“Gold flows were net bearish over the period as money managers appear to have reacted more quickly and strongly in this market than in other precious metals markets to the higher-than-expected US CPI data released earlier today. the end of our period.This suggested that the high interest rate environment set by the US Federal Reserve would remain, with further rate hikes to come, which is bearish for gold as rising rates depreciate the attractiveness of non-yielding assets.”
Source: Fx Street
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