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Any further strength in Gold is likely to lift Silver – TDS

Algos are going to propel precious metals further. Markets expect CTAs will add to their net length in Gold over the coming week, in any scenario for future prices. This bolsters our conviction that the time for caution in gold has ended, TDS' Senior Commodity Strategist Daniel Ghali notes.

Gold EFPs have significantly slumped

"The current set-up is exceptionally reflexive, given that a weaker broad dollar/weaker US rates can attract additional macro fund buying activity, following significant liquidations from the extreme position sizing held by this cohort into US elections, whereas a continued strengthening in the broad dollar can attract physical buying activity associated with Asian currency depreciation hedges."

"The buyer's strike in physical markets has ended, and we now expect renewed CTA buying activity will be the next catalyst to extend the rally in flat prices further, with algos set to buy between +10% of their max size (or 20% of their current position size) and +17% of their max size in any scenario for prices over the coming week. Macro funds have rebuilt their war chests, and we see no shortage of bullish narratives that can keep their capital from flowing back into the yellow metal, particularly should algo buying push prices into new all-time highs."

"Gold EFPs have significantly slumped, despite continued strength in flat prices. Silver EFPs remain far more stubborn, as we expected, with London markets continuing to point to tightness underscoring our view for explosive upside convexity. Any further strength in Gold is likely to lift Silver given a historically cheap XAU/XAG ratio, but CTA buying activity in the white metal over the coming week will likely kick off the next leg of this rally."

USDJPY climbs amid renewed US trade tension, steady US yields

The USD/JPY rose in early trading during the North American session, bolstered by Trump’s trade rhetoric against Canada, Mexico, the EU, and China.
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Copper CTAs to abandon their net longs – TDS

Downside asymmetry in the set-up for Copper flows is forming. Range-bound price action is akin to time-decay for trend signals, which lowers the bar for whipsaws in algo positioning, TDS' Senior Commodity Strategist Daniel Ghali notes.
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