Expert Analysis: Gold Market Outlook
As the upcoming FOMC meeting approaches, all eyes are on the Gold market. TDS commodity analyst Daniel Ghali provides valuable insights into the current scenario.
Divided Sentiment Among Rates Traders
- Rates traders are split on the outlook for Fed cuts in the coming meetings.
- However, when it comes to Gold, there is a unanimous bullish consensus.
Extreme Positions and Potential Downside
Macro fund positions in the Gold market are at record highs, indicating extreme bullish sentiment. However, this could lead to significant downside potential.
- Comex non-commercial positioning analysis shows bloated position sizes, suggesting a possible market correction.
- Historically, extreme levels of macro fund positioning have preceded local tops in Gold prices.
Market Trends and Central Bank Activity
Recent trends in Shanghai trading and Asian physical markets indicate a shift in sentiment.
- Shanghai traders have reduced their positions from record highs.
- Asian physical markets are experiencing a buyer’s strike, signaling caution among investors.
- While central banks continue to buy Gold, the pace has slowed to its lowest levels in the last five years.
The Pain Trade: Downside Potential for Gold
Despite ongoing uncertainties, one thing remains clear – the pain trade in the Gold market is to the downside. Investors should remain vigilant and consider the potential risks associated with current market conditions.