As the price of Gold (XAU/USD) continues to hover near all-time highs, TDS senior commodity strategist Daniel Ghali warns of a potential positioning washout. According to Ghali, macro fund positioning suggests that the market is pricing in aggressive cuts from the Federal Reserve, while CTAs are at their ‘max long’ position size. With Asian flows deteriorating and Shanghai trader positioning under pressure, the risk of a downturn in the uptrend signals is looming.
Despite reaching record levels, several major cohorts in the Gold market are showing signs of buying exhaustion. The narratives that drove prices to these highs are now appearing stale, raising concerns about a potential positioning washout.
Analysis:
Investors in Gold should be wary of the current market dynamics. With positioning near all-time highs and signs of exhaustion in buying activity, there is a risk of a downturn in prices. It is important for investors to closely monitor market trends and be prepared for potential shifts in the Gold market.