Gold: CTA short covering supports prices – TD Securities

TD Securities analysts Ryan McKay and Bart Melek have observed that easing interest rates and a weaker US Dollar (USD) are prompting Commodity Trading Advisors (CTAs) to cover their short positions in Gold and other precious metals. While systematic positioning remains a hindrance, strong macro discretionary exposure, inflows into Exchange Traded Funds (ETFs), and demand from central banks are providing support, according to TD Securities.

These flows are expected to remain robust, particularly within the $4,000-4,100/oz range. As CTAs unwind their shorts across the precious metals sector, the support provided to metals like Gold becomes evident. The easing of interest rates and reduced strength in the US Dollar, following the initial surge post-CPI data, have contributed significantly to this support.

Additionally, macro discretionary positions continue to be elevated, while inflows into ETFs and demand from central banks are also strong. These factors have collectively offered solid support to gold, and it is anticipated that these flows will persist, especially within the mentioned price range.