CTA buying set to ignite next Gold rally – TDS

CTAs will buy Gold in any scenario for prices over the coming week, TDS' Senior Commodity Strategist Daniel Ghali notes.

Gold positioned for breakout as algos and funds return

"We expect this buying activity to kick off tomorrow, to accelerate heading into next week's NFP report, and to tally up to a massive +30% of algos' max size. This will mark the first notable buying impulse in Gold futures since the large scale liquidations associated with macro fund divestment observed in the weeks surrounding Liberation day. For weeks, we have argued that the surprise in Gold will be that prices struggle to trade lower; despite the worst-case scenario on trade."

"Now, we already see nascent signs of selling exhaustion from ETF holders, with Chinese ETF outflows grinding to a halt over the last session while Shanghai Gold prices have already broken out of the downtrend previously set from all-time highs. At the same time, a shift in strategic asset allocations has contributed a significant portion of recent global ETF inflows, suggesting that persistent central bank buying activity should be sufficient to offset such outflows from retail holders."

"Selling exhaustion is now in the rearview. While markets await a catalyst for the next demand impulse, we now imminently expect CTA buying activity and macro fund underpositioning to catalyze the next leg higher in Gold prices."