Will the Fed outperform gold markets?

There is evidence that the latest leg of the rally in Gold may have been a hunt for a stop, given the odd timing for a foray into new all-time highs, alongside evidence that new shorts have been added by proprietary traders, family offices and funds macro, while Gold. has been near highs, notes Daniel Ghali, senior commodities strategist at TDS.

The balance of risks is tipped significantly to the downside

“We still believe the balance of risks is tipped significantly to the downside, with macro funds positioned at levels that marked historic local peaks, including in July 2016 (Brexit referendum), September 2019 (“stealth QE”) and deep into the pandemic in March 2020. Shanghai traders also maintain a record length and CTAs are already at their maximum.

“With nearly 120 bps of price cuts by the end of the year and a quick return to ‘neutral’ in the New Year without a bearish consensus, this Goldilocks price could easily be challenged in the coming months.”

“The moment in the weakness of the labor market generates convictions. While labor market weakness has historically led to further weakness, it remains to be seen whether that will be the case this time, as previous instances of labor market weakness have also been accompanied by layoffs, which have not yet been a characteristic of this cycle. “