Gold: Trust, not demand, drives the mega-theme – TDS

FXStreet Insights Team FXStreet

Gold prices aggressively rejected the move towards the uptrend that defined this year's epic rally, TDS' Senior Commodity Strategist Daniel Ghali notes.

Fast money shorts set stage for a surprise surge

"Price action corroborates our view that fast money have engaged in short positions, in line with our latest read of macro fund positioning. This flow may have been concealed in CFTC positioning data due to concurrent (1) risk parity re-levering over the last weeks and (2) ebbs and flows in CTA positioning, which obfuscate the read of aggregate open interest."

"For the time being, the buying impulse which powered gold's rally has eased along with the détente on trade, but many catalysts lie ahead, several of which appear imminent: (1) growing echoes of "Treasury QE"; (2) trade files; (3) resumed interest rate cuts, (4) a stagflationary environment, or (5) challenges to central bank credibility. Western money managers will be caught off guard."

"Price action in the Shanghai premium already suggest dip buyers have reemerged in the East. We continue to argue that gold's rally isn't about demand, it's about trust. We believe we are in the midst of the third major change in the monetary order with striking analogies to the 1970s. This positioning set-up is simply a symptom of this mega-theme."

Author

FXStreet Insights Team

FXStreet

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.

EUR/USD holds losses near 1.1850 as US, China holidays keep trade muted

EUR/USD opens the week on a softer note, trading near 1.1860 during the Asian session on Monday. Activity is likely to remain muted, with United States markets closed for the Presidents’ Day holiday, while Mainland China is also shut for the week-long Lunar New Year break.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold remains below $5,050 despite Fed rate cut bets, uncertain geopolitical tensions

Gold edges lower after registering over 2% gains in the previous session, trading around $5,030 per troy ounce during the Asian hours on Monday. However, the non-interest-bearing Gold could further gain ground following softer January Consumer Price Index figures, which reinforced expectations that the Federal Reserve could cut rates later this year.

Week ahead: Data blitz, Fed Minutes and RBNZ decision in the spotlight

The US jobs report for January, which was delayed slightly, didn’t do the dovish Fed bets any favours, as expectations of a soft print did not materialize, confounding the raft of weak job indicators seen in the prior week.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.