Gold: Tepid flows despite geopolitical shock – TD Securities

TD Securities Senior Commodity Strategist Daniel Ghali highlights surprisingly weak Gold demand since the onset of the war, with OTC interest fading after the first session and volumes resembling a summer lull. Leveraged participation, ETFs, SHFE positioning and retail buying have all softened, reflecting concerns about the debasement trade, reduced Middle Eastern purchases and Gold’s now-mainstream institutional ownership.

Positioning and debasement fears cap demand

"Where are the gold flows? Since the onset of the war, we see little evidence of OTC demand kicking in beyond the first trading session."

"Our volumes-based analysis places gold demand at summer-lull levels in recent trading sessions. Levered participation has somewhat declined over this horizon, likely owing to the modest deleveraging from quant funds highlighted last week."

"ETF holdings of gold have subsided. The largest traders in SHFE gold have modestly liquidated some length. Retail demand has abated since the cohort's unprecedented purchases in January."

"The lack of inflows into gold reflect (1) concerns around the debasement trade as markets price-out Fed cuts, (2) reduced gold purchases by Middle Eastern nations; and (3) gold positioning - gold is no longer a fringe asset, and is instead now held by a large majority of institutional investors as per our analysis of 13F filings."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)