Gold Positioning Approaches 'Absolute Capitulation' as Central Banks Boost Demand
Deutsche Bank's commodities research note warns that gold positioning is approaching an 'absolute capitulation' moment. The bank argues that despite speculative capital exiting en masse, gold prices have failed to make new lows.
Central banks and institutional investors are increasingly buying gold as a hedge against geopolitical uncertainty and rising interest rates. Deutsche Bank estimates that this demand is absorbing the selling pressure from commodity trading advisors (CTAs) who have sold 52% of their maximum position size in just one month.
The bank warns that if gold prices decline further, CTAs could be pushed to 'effective max short' levels, which would mark an absolute capitulation moment for the market. However, Deutsche Bank believes that this scenario is highly improbable due to sustained buying by central banks and institutional investors.