Gold: Nearly half of trend followers positions to be liquidated – TDS

For the famous time in months, CTAs might per chance well launch liquidating Gold in a downtape over the arriving week, reinforcing the self-discipline-up for our tactical fast. Replacement takes on the positioning self-discipline-up are of the watch that Western cash managers can proceed to develop their size, underscored by a unadorned read of CFTC positioning files which ability that speculator positioning is entirely a flee frothy and effectively below its historical maximum, TDS commodity analyst Daniel Ghali notes.

Imaginable CTA selling shriek to launch over the arriving week

“Our developed positioning analytics, on the opposite hand, provide an edge on this read. Our point of rivalry: accounting for the leverage context suggests it’s already effectively maxed out. CTAs’ and threat parity portfolios’ positioning is constrained by the leverage environment, which explains why we deem the CFTC files has already effectively reached a native maximum despite the truth that it remains below its historical max.”

“Macro fund positioning shall be effectively maxed out. This positioning remains statistically per extra than 400bps of Fed cuts over the arriving year, and is at stages that marked native highs in loads of old cycles, followed by drawdowns within the 7%-10% differ.”

“With loads of cohorts simultaneously susceptible, a persevered downtape in Gold can at closing launch to catalyze CTA selling shriek over the arriving week, reinforcing our watch that the famous cohort to blink can snowball subsequent selling shriek. After all, we estimate that almost half of of trend followers positions shall be liquidated in a revisit in direction of $2400/oz. Downside dangers are actually stronger.”

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