As the world’s leading investment manager, I can confidently say that gold is currently one of the most popular trades in the financial market. Despite unanimous bullish sentiment on the Street, there are signs that major fund positioning may be reaching its limit. However, Chinese retail investors are stepping in to drive demand and push gold prices even higher.
According to TDS senior commodity strategist Daniel Ghali, macro fund positioning is nearing its peak, and Asian physical markets are experiencing a slowdown in buyer activity. This, coupled with top Shanghai traders selling off their near-record high positions, suggests that the market may be due for a correction.
Gold Prices Defy Expectations
Despite these warning signs, gold prices continue to climb. The upcoming inflation data and Jackson Hole symposium are expected to be key factors in determining the future price of gold. Chinese retail investors are driving this demand, with a resurgence in buying activity for Gold ETFs.
It is surprising to see this level of demand from Chinese retail investors, especially considering the previous bid was driven by Asian currency depreciation pressures. Whether this demand is sustainable remains to be seen, as it could be driven by momentum trading or Fed pricing expectations.
Analysis:
Overall, the current situation in the gold market is complex. While there are signs of overextended positions and slowing buyer activity, the demand from Chinese retail investors is providing support for higher prices. Investors should be cautious and monitor upcoming events like the inflation data and Jackson Hole symposium to make informed decisions about their gold investments.