Consensus positioning in gold remains on the long-side, keeping precious metals prices resilient. What is keeping gold bugs from capitulating? Strategists at TD Securities provide the answer.
CTA flows are immense
“CTA trend follower flows help to explain stubbornly elevated positioning levels, but prices are now challenging the threshold that would imply a sustained downtrend forming in coming months, suggesting the bar for additional liquidations from this cohort is low.”
“While CTA flows are immense, the pandemic has reinvigorated discretionary trading in gold, leaving 'Other Reportables' to play a larger role in speculative markets. This cohort has yet to capitulate, and without conviction that the Fed could blink, represents the greatest risk for a liquidation vacuum as we exit the pandemic-regime.”