Gold faces $4,000 test of bullish outlook – TD Securities

With Gold fluctuating around the key $4,000/oz level, its long-term bull case is being tested, according to TD Securities’ Ryan McKay and Bart Melek. Commodity Trading Advisors (CTAs) hold short positions across all signals. Heavy selling by systematic funds and ETF outflows, particularly from China, are adding to the pressure. Nevertheless, resilient prices and continued central bank demand underpin the broader supportive outlook, while short-covering is likely above $4,092/oz.

Resilient demand counters CTA short positions

"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.)