Gold under pressure ahead of NFP

Gold prices are under pressure but remain decisively in the range set near all-time highs. However, for the first time in months, price action could now unlock CTA selling activity next week, notes Daniel Ghali, TDS Senior Commodity Strategist.

The gold range is near all-time highs

“This setup has formed just in time for the release of NFP data, which risks injecting volatility into markets amid TD Securities’ expectations for a 205,000 job gain.”

“While we would expect CTAs to sell off only 10% of their peak size in a scenario where prices fall below $2,450/oz in the coming sessions, this could be the first cohort to blink in a context where positioning indices I am flashing red on several fronts. .”

“Macro fund positioning is particularly extreme and our indicator is now nearing record highs. While this consensus view can be challenged, a context in which rate cuts achieve a soft landing is not yet necessarily a positive environment for gold, as capital could plausibly flow from the yellow metal to more productive uses.”