The recent drop in gold price rebound factors has raised concerns about whether this trend will continue. Analysts from TDS suggest that gold may face more declines in the near future. According to Daniel Ghali, TDS’s senior commodity strategist, current market conditions indicate that gold prices could fall further.
Market Positioning and Expectations
TDS notes that traders are holding more gold than what is expected from Federal Reserve rate cuts alone. The so-called Trump trade seems to have created some overconfidence in the market. Additionally, there are signs that buying interest in Asia is decreasing, as shown by a drop in the SGE premium and early signs of sales by major Shanghai gold traders.
Recent Liquidations Impact
Recent liquidations from Shanghai Futures Exchange (SHFE) traders are adding to the downward pressure on gold price rebound factors . In the past session alone, over 5 tonnes of gold and 6.6 million ounces of silver were sold. If gold was previously used to hedge against currency issues in Asia, the recent strength of Asian currencies now supports further declines in gold prices.
Future Price Predictions
Looking ahead, falling gold prices might lead to significant selling by trend-following traders. If gold drops below $2365 per ounce, it could trigger a selling program reducing holdings by about 5%. Our forecasts suggest that if prices continue to drop over the next week, it could lead to major selling, reducing holdings by up to 25%. Conversely, if prices rise, it’s unlikely to spur buying.
Stay updated on the latest gold prices and market trends by visiting Daily Gold Signal and checking their Daily Gold Update.
