Gold's manic ascent reeks of FOMO – TDS
|Gold’s recent surge has unfolded without fresh fundamental drivers: real rates have risen, the dollar hasn’t broken new lows, and central bank demand—particularly from BRICS+ and China—has waned. Retail participation in ETFs has hit decade highs, signaling a rally overwhelmingly driven by Western buyers, TDS' Senior Commodity Strategist Daniel Ghali notes.
Western buyers drive Gold surge
"For months, we have argued for the debasement. And yet, gold's manic ascent has occurred during a time in which no new information pertaining to the debasement trade has hit the tapes. Yes, the Fed has cut rates, but real rates have risen since, and the dollar hasn't meaningfully printed a new low since July. At the same time, for the first time this year, we can no longer argue gold is overbought but under-owned. Central bank demand has declined notably over the last months."
"The BRICS+ purchases have become an increasingly small portion of global central bank purchases. China has remained on a buyer's strike. The driver of previous unofficial central bank purchases has not been relevant since April. Retail participation in ETFs is at least at a decade-high. Overall, this rally is overwhelmingly driven by the West."
"Unless (1) the network of gold buyers is growing at an epic pace; (2) the execution of obscured central bank purchases has changed; or (3) "this time is different" for any other reason, we see a set-up in which extreme FOMO has occurred heading into important inflection point for the prevailing market narrative. The Supreme Court decisions now have the potential to inflict large-scale damage."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.