Macro fund positioning in Gold as a proportion of open interest reached a new all-time high last week, TDS Senior Commodity Strategist Daniel Ghali notes.

Risk for higher Gold prices remains

“We have highlighted that macro fund positioning is now extreme, but bets on the Fed's large cuts helped to inch our gauge even higher than notable historical precedents including the Brexit referendum, the ‘stealth QE’ narrative and even the depths of the pandemic crisis.”

“Western Gold ETFs are seeing modest inflows, but at the same time, Chinese Gold ETF outflows are persisting, and while the top Shanghai traders have marginally added to their net length in SHFE Gold, their positions have now remained near record-highs for months.”

“We closed our tactical short position in Gold following the Fed's larger-than-anticipated start to its cutting cycle, but note that positioning cues remain extreme nonetheless. The risk for higher Gold prices remains an even further broadening of the narrative attracting capital, potentially driven by fears of a 'macro reckless' Fed that has a historically and asymmetrically low bar for easing, despite decent data.”