Gold: CTA short covering supports prices – TD Securities

TD Securities’ Ryan McKay and Bart Melek note that easing interest rates and moderating US Dollar (USD) strength are encouraging CTAs (Commodity Trading Advisors) to cover shorts in Gold and other precious metals. Systematic positioning remains a drag, but strong macro discretionary exposure, ETF inflows and central bank demand are providing support. TD Securities expects these flows to stay robust, particularly in the $4,000-4,100/oz region.

Systematic shorts still weigh on gold

"CTAs are covering notable shorts across the precious metals complex as easing rates, also driven by systematic short covering, helped metals such as gold find important support."

"Interest rates and dollar strength have moderated after the initial surge post-CPI data, offering much-needed support to the precious metals complex."

"Elsewhere, macro discretionary positions remain elevated, while ETF inflows and central bank demand also remain strong."

"These flows have ultimately offered strong support for gold, and we expect these flows will remain robust, especially in the $4,000-4,100/oz region."