Deutsche Bank's Ghali Urges Gold Buying Amid Oversold Conditions

Deutsche Bank's head of metals research, Daniel Ghali, has highlighted gold's resilience amid recent market pressures. In an interview with BNN Bloomberg, Ghali noted that gold has not set a new low since July despite US 10-year Treasury yields exceeding 5% and oil prices surpassing $100 per barrel. He described the metal as oversold and underowned, suggesting it is an attractive investment for the coming year. Ghali attributed gold's strength to increased buying by central banks and official buyers, which is more than double the pace seen in 2021-22.

Ghali also pointed to institutional participation in gold, which has grown by around 70% since 2021. However, he cautioned that thin liquidity during China's Golden Week could lead to a final market flush before a rebound. He urged investors to buy gold during the London Bullion Market Association's conference in Sorrento but warned of potential near-term volatility.

Looking at other metals, Ghali expects silver to underperform due to oversupply, with London inventories at their highest since November 2024. In contrast, he sees copper as offering the largest potential gains, citing its tightest market conditions since the 1980s. The US and China hold roughly 70% of above-ground copper stocks, contributing to scarcity.

Other analysts, such as Morgan Stanley's Gower, see $4,000 as a strong floor for gold, while Bank of America warns of downside risk under that level. The market's positioning is near capitulation, with trend-following funds holding their largest net short position since October 2021 and discretionary traders cutting long positions by around 55% from a June peak.