Gold Price Set to Plunge as Record-Setting Long Positions Unwind

The recent surge in gold prices has been accompanied by an equally impressive increase in the number of long positions held by non-commercials, according to the latest CFTC report. As of August 25, these speculators are holding a net long position of 243,334 against short positions of 33,825, accounting for 56.9% of the entire market.

This reading is significant because it has only been surpassed three times in the past 400 weekly reports dating back to 2018, and it's just 0.81 points away from the all-time record. The current market conditions are particularly challenging for a Fed hike, especially with PCE inflation running at 3.7% over the past 12 months and 4.1% over six months.

Warsh, in a speech at Jackson Hole, emphasized the importance of considering these economic indicators when making monetary policy decisions. The author of the report believes that the current market positioning is not conducive to a Fed hike, and they're predicting an unwind of the long positions, with a target price of $4,280 by the September meeting.