Since the second quarter of this year, gold prices have fallen significantly, and market long positions have continued to clear along with the decline in gold prices. However, gold bulls have been eager to try again recently, and have replenished their position in and .
New changes in gold market game
During the National Day holiday, international gold price rebounded, and gold allocated funds and speculative funds that had previously left the market were compensated to a certain extent.
Judging from the long-term allocation of funds, since October, the holdings of SPDR gold ETFs have increased by nearly 6 tons, changing the previous net outflow trend that lasted for more than five months. In addition, the latest data released shows that as of October 4, the speculative net long position of gold CFTCh, which is usually used to observe speculative funds' attitude towards the gold market, increased by 36,000 compared with September 27.
"During September 28th to October 4th, of the 36,000 positions in increased by , only 8,000 were from long positions, and the rest mainly came from speculative short positions reduction and leaving the market. This shows that after the gold price continued to decline, some short funds chose to cash in profits, while a small number of long funds took into account the recent geopolitical situation and the gold price fell to the lows in the past two years, and there was a certain degree of recoupling, but the sustainability remains to be seen." Zhang Chen, an analyst at Yide Futures, told reporters.
"The reason why gold bulls actively increase their holdings recently is that on the one hand, the net long orders of the management fund are negative, and there is demand for oversold recovery; on the other hand, Fed interest rate hike has entered the middle stage, US dollar index and US bond yields have entered a high position, expectations of US economic recession heat up, and the value of gold long allocation has been rediscovered by the market." Liu Chenye, a researcher at the Donghai Futures precious metals, said.
"Recently, Federal Reserve accelerates tightening of monetary policy expectations are gradually priced by the market, and the overseas geopolitical situation has a trend of escalation again, while the expectations of economic recession in Europe and the United States continue to heat up, which is both good for gold trends. And as the pace of tightening monetary policy of the Federal Reserve gradually slows down, the market's concerns about the economic recession in Europe and the United States continue to heat up, and gold prices may rebound, so gold bulls have begun to increase long allocations in the near future." said Shi Jialiang, senior analyst of macro and precious metals at Founder Medium Futures .
Since 2022, overseas geopolitical situations and Federal Reserve monetary policy adjustments have successively become the core factors affecting the trend of gold price . Especially since the second quarter, the Federal Reserve has significantly increased interest rates by , and the US dollar index and US bond yields remain strong, putting downward pressure on gold prices. In the first quarter of this year, affected by factors such as overseas geopolitical situations, safe-haven demand supported the continued strengthening of gold prices. The spot price of gold in London once rose above US$2,000 per ounce, close to the highest price set in 2020.
Gold may face a low long opportunity
Looking ahead to the fourth quarter, many analysts believe that the impact of negative factors in the gold market may weaken, and gold prices may usher in a phased turning point.
"As the US dollar benchmark interest rate begins to enter above the restrictive level recognized by the Federal Reserve, its inhibitory effect on the economy continues to strengthen. In addition, some US economic data also show that its economic recession expectations continue to strengthen, which is more beneficial to gold prices." Zhang Chen suggested that investors focus on two important time nodes: the announcement of GDP in the third quarter of the US in late October and the Fed FOMC meeting in early November, which are expected to lead to a turning point in the price of precious metals from weak to strong. "In the fourth quarter, the foreign gold price is very likely to hit the previous low support, but it is expected to be difficult to fall below $1,567/ounce. Investors can refer to the configuration trading below COMEX gold futures $1,650/ounce."
"In the fourth quarter, the pace of the Federal Reserve's monetary policy adjustment, concerns about the European and American economic recession and progress of overseas geopolitical situation continue to dominate the gold market." Shi Jialiang believes that as the impact of the tightening of the Federal Reserve's policy in the future is gradually denominated by the market, the overseas geopolitical tensions have heated up again, the intensified concerns about the European and American economic recession and the demand for asset allocation, the spot price of gold in London is expected to return to above $1,800/ounce again.
Liu Chenye said that there is still room for the Federal Reserve to raise interest rates, and gold prices may not have a trend increase, and the general trend may still remain fluctuating."If the U.S. recession expectations are expected in the future, gold prices may perform strongly in commodities due to their safe-haven properties. They can go long on lows. The price comparison between gold and other risk sentiment represents the representative commodities." He suggested.
Edited by: Yesong
