Gold: Bullish outlook faces test at $4,000 – TD Securities

TD Securities’ Ryan McKay and Bart Melek note that Gold’s long-term bull thesis is being challenged as prices oscillate around the key $4,000/oz level. CTA's (Commodity Trading Advisors) are short across all signals, with systematic funds heavy sellers and ETF outflows, especially from China, adding pressure. However, resilient price action and ongoing central bank demand keep the broader supportive narrative intact, with short-covering likely above $4,092/oz.

CTA shorts versus resilient demand

"The long-term gold bull thesis faces a test near the $4,000/oz level, with CTAs now short across all signals."

"CTAs have already been heavy sellers in gold, with systematic funds firing short across all momentum indicators."

"At the same time, early-stage ETF liquidations, particularly in China, have further weighed on the weakening market."

"Against this backdrop, spot and futures pricing has traded below the key $4,000/oz level, however the market has again shown signs of being extremely resilient with prices recovering in fairly short order."

"Despite the near-term easing of ETF flows, the trend remains supportive, while central bank demand has been a key upside driver, particularly when prices are within this territory."

"CTAs would start to cover shorts north of $4,092/oz."

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