TD Securities notes gold needs to surpass $4,200/oz to trigger minimal CTA short covering, with $4,300/oz required for notable longs.
Gold prices rose after the Federal Open Market Committee held rates steady and Fed Chair Warsh indicated tolerance for an inflation shock. The shift in rate hike expectations from September to December provided temporary support but did little to alter the broader outlook for precious metals.
Commodity Trading Advisors (CTAs) remain heavily short, with strategists highlighting that a move above $4,200/oz is needed for minimal short covering. A break above $4,300/oz would be required to establish notable net long positions, a threshold analysts view as unlikely in the near term.
Market expectations for further rate hikes continue to cap significant bullish momentum in gold, despite the recent repricing of Fed policy.