Gold positioning remains extreme as the price approaches an all-time high

Markets are now pricing in a currency cut of 50 or 25 basis points by the US Federal Reserve (Fed), but more than 175 basis points of cuts through March have already attracted massive positions in gold . That explains the tepid reaction to the US Non-Farm Payrolls data, notes Daniel Ghali, TDS Senior Commodity Strategist.

Gold remains near all-time highs

“We reiterate that macro fund positioning is at levels matched only by the Brexit referendum of 2016, the ‘stealth QE’ narrative of 2019 or the peak panic of the Covid-19 crisis in March 2020. The extreme positioning of this cohort has marked history. notable local highs in gold prices and subsequent declines that ranged in the 7%-10% range.

“While a notable NFP beat could have helped catalyze a reassessment of expectations, it is not a necessary condition for gold prices to run out. Weaker price action also lowers the bar for CTAs to sell, with a large decline already likely to catalyze trend-followers’ selling activity despite gold remaining close to all-time highs.”