Gold has seen a dramatic shift in recent times, almost mirroring the volatility of Bitcoin, according to TDS’ Senior Commodity Strategist, Daniel Ghali. With the US election serving as the focal point, a liquidity vacuum triggered the recent price surge. However, this rapid rise is followed by a deeper-than-normal consolidation in the market, setting the stage for some important movements in the gold market.
The Pre-election Setup
Before the US election, market conditions were already primed for a potential Gold rally. Evidence indicated that Gold’s recent surge was due to a liquidity gap that intensified leading up to the election. Ghali highlights how this created a perfect storm for the Gold market, driving prices higher.
Liquidity Vacuum and Its Impact
Gold prices were not just rising due to political events but also because of a liquidity vacuum. This lack of market depth amplified the rally, causing a sharp spike in prices. Despite the overbought conditions, the current sell-offs haven’t been extreme. Commodity Trading Advisors (CTAs) have reduced their positions, shedding only about 10% of their peak size. This could mean further selling in the coming weeks, especially if the downward trend continues.
Selling Pressure Continues to Build
The selling pressure on Gold is not limited to the US market. International players, especially in Shanghai, have contributed significantly to this trend. In fact, more than 35 tonnes of Gold were sold in just the past month. This comes during a period that typically sees seasonal demand increases. Despite this, physical Gold buying remains subdued, suggesting a continued bearish outlook for the precious metal.
The Outlook for Gold and Silver Prices
The outlook for Gold is concerning, with continued downward pressure expected. Ghali points to a deteriorating setup from both macro funds and Shanghai traders, suggesting a deeper-than-normal consolidation. Silver, which has been relatively stable, could follow Gold’s path and see a decline. The pressure on Gold might also drag Silver prices down before the market finds a floor.
Gold may soon experience significant fluctuations, much like Bitcoin’s movements, and investors should remain cautious. Market conditions are pointing to continued volatility, with liquidation activities expected to persist in the coming weeks.
Conclusion
In summary, Gold prices have entered a new phase, heavily influenced by global liquidity and political events. The ongoing sell-offs, particularly by CTAs and Shanghai traders, point to a challenging period for Gold. If you’re interested in following the latest updates on Gold and its market trends, you can explore more detailed analysis on Daily Gold Signal, which provides insights on daily fluctuations in the market.
To stay updated on market changes and trends, check out Daily Gold Update. This source is essential for anyone looking to track Gold prices and other precious metals in real-time.
