As the decline in equity indices and yields continues, commodity demand expectations are also melting within the complex, according to TDS senior commodity strategist Daniel Ghali.
Expect Massive Selling Activity in Platinum Markets
Ghali notes, “We expect massive CTA selling activity in platinum markets this session, with CTAs likely to shed their entire book long and grow a net short position closer to its effective ‘max short’ position size.”
Furthermore, he adds, “While CTAs are already holding their effective ‘max short’ position in palladium, silver remains vulnerable to algo selling activity below the $25.80/oz mark. Copper markets are also being weighed down by algo selling activity, as CTAs finally start to shed their books long.”
Ghali’s simulations indicate a low bar for subsequent CTA selling activity, with algos likely to continue selling the red metal even in a flat tape over the coming week.
Analysis and Implications
The decline in commodity demand and subsequent selling activity in platinum, palladium, silver, and copper markets can have significant implications for investors. As CTAs shed their long positions and increase their short positions, prices of these commodities may face further downward pressure.
Investors should closely monitor these developments and consider adjusting their investment strategies accordingly to mitigate potential losses. Additionally, fluctuations in commodity prices can also impact broader financial markets, leading to increased volatility and uncertainty.