Tsunamic Wave? 3 Analysts Commented on Gold Price!

Is gold at the crossroads? The bullish sentiment drops to March lows. Rising bond yields and a stronger US dollar have forced more hedge funds to increase the bearish bias on gold, according to analysts citing the latest data from the Commodity Futures Trading Commission. Detail cryptocoin.com‘in.

Relationship between gold and stagflation

The latest trading data shows that the net bullish position is at its lowest point since early March. However, analysts say the market may be at an inflection point as inflation continues to rise, raising concerns that slowing economic growth will lead to stagflation. Commodities analysts at TD Securities said, “With investment flows already declining, a cleaner positioning list indicates that weak price action will not turn into a rout. “Meanwhile, fears of stagflation are getting stronger, which could once again spur interest in precious metals down the road.”

For the week ended Sept. 28, the CFTC’s unbundled Commitments report showed money managers cut their speculative gross longs in Comex gold futures to 118,923 with 854 contracts. At the same time, open interest increased by 15,651 contracts to 88,062. Gold’s net maturity currently stands at 30,861 contracts, down 34% from the previous week. Commerzbank precious metals analyst Carsten Fritsch noted that the bullish speculative position of gold has dropped more than 50% in the past two weeks.

When will the Fed do what?

Investors and hedge funds have been increasingly falling for gold as the Federal Reserve seeks to tighten interest rates faster than expected. Last week, Federal Reserve Chairman Jerome Powell reiterated in his testimony to Congress that the U.S. central bank may release plans to cut monthly bond purchases in November and start the contraction process in December. The Tapper plan also comes after the Federal Reserve said it would see a rate hike in December 2022. It created some selling pressure under the Federal Reserve’s hawkish sentiment, which fell below critical support at $1,750 an ounce during the survey period.

Although bullish sentiment for gold is at its lowest in more than seven months, Fritsch said gold could be at a turning point. Fritsch: “Low speculative net long positions often indicate a trend reversal in price performance. “For example, that was the case in March, when the price soon hit its 2021 low and had not yet been broken.” Grant Beasley, managing director of Highbury Capital, said in a comment on Twitter that although sentiment in the gold market continues to decline, its impact on prices may be limited.

While gold sentiment is still negative, recent data shows hedge funds cut their bearish bets on silver last week. The latest report showed that money-administered speculative gross longs in Comex silver futures fell 791 contracts to 47,918. At the same time, open interest decreased by 3,005 contracts to 43,918. During the survey period, silver prices managed to hold support above $22 an ounce. Silver prices briefly fell below support last week; however, some analysts indicated that the decline is a buying opportunity. Despite the recent surge in silver prices, many analysts are optimistic that the long-term fundamentals of the precious metal will remain in place as nations continue to move forward with the global green energy transition.

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