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Gold: CTAs are now set to buy Gold – TDS

Gold markets were swept into the quant fund leveraging last session, but CTAs are now set to buy Gold in every reasonable scenario for price action over the coming sessions, TDS’ Senior Commodity Strategist Daniel Ghali notes.

CTA buying activity to support prices in the imminent term

“The unique set-up in Gold over the last weeks has underscored the strong start to the year, with (temporarily) acute Asian currency depreciation pressures initially catalyzing 'mystery buying' activity, whereas conversely, a weakening dollar over the last ~week has attracted new length from Western macro funds.”

“In our view, the elevated aggregate open interest in comex Gold overstates the extent to which positioning is bloated after accounting for risk parity fund leverage, with our advanced positioning analytics still pointing to more subdued macro fund positioning than the extreme levels held into US elections.”

“Expected CTA buying activity will help support prices in the imminent term, and we still see some scope for macro fund buying to persist thereafter.”

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FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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