Gold: CTA liquidation and dip-buying narrative – TD Securities
TD Securities’ Ryan McKay and Bart Melek highlight that CTAs (Commodity Trading Advisors) have turned large sellers of Gold, liquidating nearly half of their net-long exposure as markets price a Federal Reserve hike and higher energy costs.
CTAs, or Commodity Trading Advisors, have significantly reduced their exposure to Gold, nearly liquidating half of their net-long position, as markets anticipate a Federal Reserve hike and rising energy costs. Simulations suggest that these systematic funds may fully unwind or even turn net short, but the authors argue that factors like dollar debasement narratives, central bank demand, and ETF inflows provide longer-term support. Consequently, the near-term weakness in Gold could present a buying opportunity.
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