CTAs are to be back on the bid in Gold in any price scenario - TDS

There's an ongoing algo selling activity in Gold, TDS' Senior Commodity Strategist Daniel Ghali notes.

Gold selling activity to remain short-lived

"The yellow metal is being swept into this round of deleveraging and CTA liquidations, but our simulations of future prices suggest that CTAs will be back on the bid in Gold in any scenario for prices over the coming sessions, suggesting this round of selling activity will remain short-lived."

"Further, macro funds & discretionary traders have replenished their war chest of dry-powder to deploy, with evidence suggesting macro fund purchases are back on the rise. After all, rates markets are already priced for a hawkish outcome, whereas the USD's relentless rally has not only failed to weigh on precious metals amid signs of Mystery Buying, but US10y yields are notably strengthening into this risk-off trading activity, and geopolitical uncertainty remains elevated."

"While macro funds will redeploy their capital into the yellow metal's warm embrace, CTAs will contribute to further gains whereas a reversal in the current trends in price action would likely be mitigated by 'Mystery Buying' associated with Asian currency depreciation pressures."