Global markets are pricing a fast return to normalization, a cutting cycle steep enough that it has few historical analogies outside of a recession, TDS Senior Commodity Strategist Daniel Ghali notes. 

Markets price quick interest-rate cuts

“While there is an argument to be made that this is consistent with a period of disinflation from elevated levels, we see a low bar to challenge ‘this time is different’ pricing. At the same time, the set-up in Gold is such that a period of high deficits, slowing growth, sticky inflation fears, currency devaluation and an imminent cutting cycle has already attracted macro fund capital to the Yellow Metal's warm embrace.”

“Macro fund long positioning as a proportion of aggregate open interest is now beyond its 95th percentile, which has historically marked significant turning points for macro narratives as highlighted in our first chart of the day. This time around, the set-up also features 'max long' CTAs and Shanghai trader positioning at record highs.”

“Chinese ETF and broad commodity index outflows have already commenced, however. This begs the question: who will blink first?”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD: Next on the downside comes 0.6500

AUD/USD: Next on the downside comes 0.6500

Further gains in the US Dollar kept the price action in commodities and the risk complex depressed on Tuesday, motivating AUD/USD to come close to the rea of the November low near 0.6500.

AUD/USD News
EUR/USD: No respite to the sell-off ahead of US CPI

EUR/USD: No respite to the sell-off ahead of US CPI

The rally in the Greenback remained well and sound for yet another session, weighing on the risk-linked assets and sending EUR/USD to new 2024 lows in the vicinity of 1.0590 prior to key US data releases.
 

EUR/USD News
Gold struggles to retain the $2,600 mark

Gold struggles to retain the $2,600 mark

Following the early breakdown of the key $2,600 mark, prices of Gold now manages to regain some composure and reclaim the $2,600 level and beyond amidst the persistent move higher in the US Dollar and the rebound in US yields.

Gold News
SOL Price Forecast: Solana bulls maintain $250 target as Binance lists ACT and PNUT

SOL Price Forecast: Solana bulls maintain $250 target as Binance lists ACT and PNUT

Solana price retraced 7% from $225 to $205 on Tuesday, halting a seven-day winning streak that saw SOL become the third-largest cryptocurrency by market capitalization.

Read more
Five fundamentals: Fallout from the US election, inflation, and a timely speech from Powell stand out

Five fundamentals: Fallout from the US election, inflation, and a timely speech from Powell stand out Premium

What a week – the US election lived up to their hype, at least when it comes to market volatility. There is no time to rest, with politics, geopolitics, and economic data promising more volatility ahead.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures