TD Securities’ Senior Commodity Strategist Daniel Ghali has issued a warning regarding the outlook for Gold, emphasizing that Commodity Trading Advisors (CTAs) are likely to sell their Gold positions unless prices experience a strong rebound in the coming week [1]. Ghali notes that Gold is currently behaving like a risk asset, driven by USD diversification flows and a wartime-induced reduction in official-sector surpluses, particularly affecting Gulf economies and East Asia [1]. This disruption has led to a rupture in official sector demand, leaving institutional investors exposed and fueling a cycle of liquidations with limited exit options [1].
Ghali explains that while many market participants believe Gold's recent sell-off is due to deleveraging, TD Securities' estimates indicate that quant fund leverage has remained unchanged since the second day of the war. Instead, Ghali points to a structural crack in the market, suggesting that the scale of liquidations has been significant but capitulation has not yet occurred [1]. He advises investors to wait for CTA long capitulation before considering a 'buy-the-dip' strategy and highlights upcoming catalysts, such as the Supreme Court decision on Lisa Cook's trial, which could trigger further unwinds of the 'debasement trade' or fear trade [1].
No specific price levels, percentages, or dates are provided in the article, and there is no mention of immediate market reactions or analyst forecasts beyond Ghali's cautionary outlook [1].
CONCLUSION
TD Securities sees heightened risk of further Gold liquidations by CTAs unless prices rebound sharply, citing structural cracks and reduced official sector demand. Investors are advised to wait for CTA capitulation and monitor upcoming catalysts before re-entering the market. The outlook remains cautious, with significant downside risk highlighted.