As a renowned investment manager and financial market journalist, I closely monitor the systematic flows in the Gold markets. According to TDS Senior Commodity Strategist Daniel Ghali, these flows have remained relatively muted compared to other commodities. However, a potential revisit of the $2400/oz range could trigger significant selling activity from CTAs and other market players.
Shanghai Traders Liquidate Positions Amid Strengthening Asian Currencies
Recent developments have seen Shanghai traders liquidating their positions from near-record levels, while Asia remains hesitant in physical markets. The weakening of the currency-depreciation hedge in Asian currencies has played a significant role in this shift.
The possibility of a deleveraging event in Gold markets is a cause for concern, with a potential bounce in yields serving as a catalyst for selling activity from various funds and traders. It is essential to monitor these developments closely to assess the impact on the market.
Systematic flows in Gold markets have remained relatively muted, in contrast to the large-scale selling activity that has hit the tapes in the remainder of the commodities complex, TDS Senior Commodity Strategist Daniel Ghali notes.
Shanghai traders liquidate their length from near-record levels
“However, a revisit of the $2400/oz range could spark the first notable selling program from CTAs, the impact of which could potentially be exacerbated by a liquidity vacuum. We see few offsets to downside flows in the Yellow Metal for the time being, amid evidence that macro fund positioning is not only bloated but is now tapped out.”
“Shanghai traders have finally begun to notably liquidate their length from near-record levels and Asia remains on a buyer’s strike in physical markets. After all, Shanghai trader positioning was likely related to a currency-depreciation hedge, the driver of which has significantly deteriorated with Asian currencies notably strengthening over the last weeks.”
“The implications of a deleveraging event could be significant in Gold markets, which places our attention on a potential bounce in yields as a possible catalyst for large-scale mechanical selling activity from risk parity and vol-control funds, CTAs, macro funds and Shanghai traders.”
Overall, understanding the dynamics of systematic flows and the actions of Shanghai traders is crucial for navigating the Gold market. Stay informed and be prepared for potential shifts that could impact your investments and financial decisions.