According to TD Securities strategists Ryan McKay and Bart Melek, gold prices are being supported by robust discretionary and Asian buying, even as Commodity Trading Advisors (CTAs) have paused their accumulation of gold positions. The strategists note that CTAs would likely only increase their exposure if gold prices rise materially toward the $4,600/oz level, indicating that current upside momentum is primarily driven by other market participants [1].
Asian demand for gold remains strong, with broad-based buying observed across cohorts on the Shanghai Futures Exchange (SHFE) and continued inflows into gold ETFs. This discretionary and regional appetite is seen as critical to sustaining the ongoing rally in gold prices [1].
The market has also been influenced by a much weaker-than-expected US jobs report, which is expected to ease Federal Reserve policy pressures, especially as energy prices remain subdued. These factors are contributing to a shift in sentiment for precious metals, with discretionary buying leading the recovery [1].
Looking ahead, TD Securities highlights that higher energy prices could pose a challenge for gold, with upcoming US inflation data being a key focus. However, if the market believes that Chair Warsh will not raise rates in the near term, any increase in energy prices could reinforce a stagflation narrative, potentially providing further support for gold bulls [1].
CONCLUSION
Gold's recent gains are being driven by strong discretionary and Asian demand, while CTAs remain on the sidelines unless prices rise significantly. Softer US jobs data and subdued energy prices are supporting the precious metal, with upcoming inflation data and Fed policy expectations likely to influence future market direction.