Commodity demand expectations embedded within the complex are melting alongside the decline in equity indices and yields, TDS senior commodity strategist Daniel Ghali notes.

Low bar for subsequent CTA selling activity

“This dynamic weighs on the entire complex, but we expect massive CTA selling activity in platinum markets this session, with CTAs likely to shed their entire book long and grow a net short position closer to its effective 'max short' position size.”

“While CTAs are already holding their effective 'max short' position in palladium, silver remains vulnerable to algo selling activity below the $25.80/oz mark. Copper markets are also being weighed down by algo selling activity, as CTAs finally start to shed their books long as we have expected following massive liquidations from macro funds.”

“Our simulations of future prices continue to point to a low bar for subsequent CTA selling activity, with algos likely to continue selling the red metal even in a flat tape over the coming week.”