TD says macro positioning data in gold appear to be flashing warning signs – downside risk

August 22, 2024 at 12:05AM
TD is wary of gold, saying that their data on macro positioning data in gold appears to be flashing warning signs.

model suggests gold positioning is statistically consistent with 370bps of Fed rate cuts, a fairly extreme level

Commodity trading advisors (CTAs) are “max long” gold, and positioning in Shanghai has reverted to record highs

dearth of visible shorts in the market is also a concern

positioning cues suggest the market may be overly positioned for bullish gold narratives at the moment

TD says that fundamental factors for gold remain strong, but also say that narratives often end up chasing prices rather than driving them:

risk is of washout in gold positioning, potentially triggered by key events like the Jackson Hole symposium or the next nonfarm payrolls report

downside risks appear to be growing, even if the timing of any potential correction is uncertain

the data implies the gold market may be vulnerable to a sharp pullback from current levels if positioning needs to be unwound

Its been a freight train higher:

This article was written by Eamonn Sheridan at www.forexlive.com.

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