Will Gold bugs manage to withstand this wave of selling activity? Price action over the past months has resulted in capitulation from macro funds and large-scale selling activity from systematic trend followers across nearly every commodity market on our radar, TDS senior commodity strategist Daniel Ghali notes.

Yellow Metal longs are being sold in Shanghai

“Gold is the notable stand-out, with both algos and macro funds still holding onto the bulk of their length, with aggregate readings of money manager positioning still sitting near cycle highs and with a unilaterally bullish consensus. However, Gold won't protect against a deleveraging event.”

“And, in Shanghai, signs of selling activity persist with the top traders continuing to shed some net length in the Yellow Metal. Under the hood, a trend of long liquidations has been only somewhat concealed by simultaneous short covering.”

“Looking forward, however, Shanghai traders' shorts are now trending near pre-pandemic levels, which suggests the scope for continued long liquidations to weigh on prices is more elevated, particularly when considering that physical traders are still on a buyer's strike.”