Gold macro fund positioning hits new all-time high

Macro funds’ positions in gold as a proportion of open interest hit a new all-time high last week, notes TDS Senior Commodity Strategist Daniel Ghali.

The risk for higher gold prices remains

“We highlighted that macro fund positioning is now extreme, but bets on big Fed cuts have helped push us even higher than notable historical precedents, including the Brexit referendum, the ‘stealth QE’ narrative and even the depth of the pandemic crisis. “

“Western Gold ETFs see modest inflows, but at the same time Chinese gold ETF outflows persist, and while major traders in Shanghai marginally added to their net longs in SHFE Gold, their positions now remain near record highs for months. .”

“We closed out our tactical short position in gold following the Fed’s higher-than-anticipated start to its tapering cycle, but note that the positioning indications still remain extreme. The risk to higher gold prices remains a further expansion of the capital-attracting narrative, potentially driven by fears of a ‘macro reckless’ Fed that has a historically and asymmetrically low bar for easing despite decent data.”