Could NFP data lead to a change in positions for gold prices?

Gold is trading near all-time highs, awaiting the release of the NFP just weeks before the highly anticipated start of a rate cut cycle, notes TDS Senior Commodity Strategist Daniel Ghali.

Gold is trading near all-time highs

“Today’s rate on ADP does not bode well for a directional beat in NFP, but this is not a necessary condition for gold prices to run out. Certainly, the pace that TD Securities expects on NFP could help catalyze a shift in positions, but our reading of positioning dynamics is now already at extreme levels that have historically marked significant turning points in gold markets.”

“Macro fund positioning is now at levels only seen during the Brexit referendum of 2016, the ‘stealth QE’ narrative of 2019 or the peak of the Covid-19 crisis in March 2020. This time the physical markets have already sold out , while we also see extremes in the positions of Shanghai traders alongside CTA trend followers. The downside risks are stronger.”