While Gold continues to hover near all-time highs, price action is actually weakening uptrend signals' strength, and thereby lowering the bar for CTA trend followers to liquidate their length, TDS Senior Commodity Strategist Daniel Ghali notes.
“A break below the $2,490/oz range can now catalyze selling activity that could ultimately result in liquidations totaling -25% of algos' current long positions. In the current context, which features extreme positioning, the first to blink could snowball subsequent liquidations from other cohorts.”
“We reiterate that our gauge of macro fund positioning is at its highest levels since the Brexit referendum in 2016, the ‘stealth QE’ narrative in 2019, and the depths of the pandemic in Mar2020. Election risks are a potential catalyst, with rising odds of a Trump presidency now likely to be tied to a higher USD and lower Gold prices.”