Gold faces short-term selling – TDS

Despite mounting short-term pressure in Gold futures, algorithmic traders may only briefly trim positions before re-accumulating, with broader participation metrics suggesting a potential local bottom in prices, analysts say, TDS' Senior Commodity Strategist Daniel Ghali notes.

Structural support intact amid low participation

"Fear not, but algos could sell some Gold length for the first time since Liberation Day's fallout below $3375/oz in GCQ5. Short-term trend signals are under pressure following the recent rangebound trading regime, potentially resulting in selling activity tallying up to -4% of algos' max size this session (or 7% of their current size)."

"In any scenario for prices, CTAs will re-accumulate this lost length over the coming week — and could potentially end up with an even larger position size on a continued uptape, driven primarily by vol-control and signal-strength."

"Western macro funds remain extremely under-invested. Aggregate participation in CME Gold has reached extreme levels that have historically marked local lows in prices. Overbought but underowned."