TD Securities’ commodity strategists report that CTAs (Commodity Trading Advisors) have reversed recent Gold buying, yet emphasize that discretionary investors continue to support the metal. They point out Gold’s resilience after a hawkish FOMC hike and a broadly favorable precious metals backdrop. The team expects any near-term weakness to be limited and to present renewed buying opportunities for Gold.
CTA selling seen as opportunity
"For precious metals, CTAs have unwound recent buying in gold, but the market remains well-supported by underlying discretionary investment appetite."
"We highlighted on Friday that CTA buying in gold could be quickly reversed, but note that the yellow metal is still holding extremely strong after the FOMC delivered a hawkish hike."
"Despite a hiking cycle being priced in, the broader precious metals landscape remains extremely favorable, while an easing of energy prices has also offered support in the immediate term."
"With that said, we anticipate any near-term weakness in the precious metals market would be contained to only modest CTA selling, and would increasingly be seen as a buying opportunity for the yellow metal."
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