For the first time in three years, hedge funds are in a net bear position on gold, according to the latest data from the Commodity Futures Trading Commission (CFTC). Analysts, on the other hand, expect further declines in gold prices.
TDS: Gold will come under pressure in coming weeks
The gold market is technically oversold. However, many analysts say it is possible for the bearish momentum in the market to push prices below $1,700. TD Securities analysts make the following assessment:
It has become very clear that real interest rates at the short end of the curve will continue to rise. Also, there is little chance that nominal policy rates will go up. That’s why investors cut the net position by such a massive 6% (3 million ounces) of open interest.
According to analysts, this situation has escalated further with the pending economic collapse. Also, inflation expectations have eroded and Fed rate hikes continue. In addition, there is less economic activity. In this context, analysts come to the following conclusion:
Therefore, gold prices will remain under pressure in the coming weeks. Therefore, it is possible to see gold positions continue to erode.
For the first time in three years, gold’s speculative position has turned to net short.
The CFTC’s Commitments of Traders report for the week ended July 12 showed money managers cut their speculative gross long positions in Comex gold futures to 91,669 with 11,803 contracts.
At the same time, short positions increased by 11,364 contracts to 97,802. For the first time since May 2019, the speculative position of gold turned to net short with 6,133 contracts. During the survey period, gold prices tested support at around $1,700.
Société Générale: Gold market clearly declining
“The gold market is clearly declining,” say commodity analysts at Société Générale. Analysts state that gold continues to suffer as the Federal Reserve maintains its aggressive monetary policy stance. cryptocoin.comAs you can follow on , US inflation rose to over 9% last week, to its highest level in 40 years. After that, markets began pricing in the possibility of a full 1% increase in the Fed Funds rate. However, expectations came back and markets eased by 75 basis points.
Analysts say the Fed’s aggressive stance could push the US into recession. They also note that it could create enough demand destruction to cool the red-hot inflation pressures in commodity markets. Analysts state that this environment has increased real interest rates and the US dollar, which are the two big headwinds for gold. Accordingly, analysts make the following statement:
The DXY index rose 1.44% in the week through July 12 to 108. This is the highest level since 2002. US real interest rates increased by 13 basis points in the same period. It’s also well above 50 basis points since mid-June. However, a level not seen as sustainable since June 2019.
The French bank, meanwhile, noted that its entire precious metal complex saw nearly $4.2 billion in bearish outflows last week, mostly driven by gold.
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