Precious metals have faced heavy selling from commodity trading advisors, with gold pressured by rising real rates and a firmer US dollar. The note points to ongoing inflows into exchange-traded funds as a counterbalance, alongside continued central bank demand that has, in their view, helped stabilise the market despite the macro headwinds.
China’s central bank, the PBoC, reported a 23rd consecutive month of purchases, adding 23 tonnes in September. The analysts also attribute support to discretionary positioning and persistent demand linked to geopolitical risk, fiscal concerns, dollar debasement, de-dollarisation and stagflation, arguing these forces could keep bids resilient even if real rates remain elevated. They frame this as a setup for gold to further decouple from real rates and extend a bull run through 2027.
Central Banks and ETFs Establish a Solid Floor
We are seeing commodity trading advisors (CTAs) aggressively selling gold, which has put short-term pressure on prices amid a stronger dollar. However, we believe this pullback presents a highly attractive entry point for derivative traders over the coming weeks. Strong structural demand from central banks and ETF inflows is establishing a solid floor beneath the market.
Recent reports show global central bank gold demand remained robust, holding near historic levels of over 1,000 tonnes annually. Additionally, gold ETFs have recorded consistent net inflows over the past several months, reversing the previous trend of liquidations. We should interpret this steady institutional accumulation as a strong signal to buy the dip.
Strategies for Positioning and Market Outlook
In the coming weeks, we should target long positions using options or futures contracts to capitalize on the expected rebound. Utilizing longer-dated options expiring in 2027 will help us navigate short-term volatility while staying positioned for the broader bull run. We suggest focusing on key support levels to establish these bullish positions.
Rising geopolitical risks and ongoing worries about national debt levels continue to drive investors toward safe-haven assets. Historically, when gold successfully decouples from rising real interest rates, it paves the way for powerful, multi-year upward trends. This unique market dynamic suggests that the path of least resistance for gold remains firmly to the upside.
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