Gold Price Surge Unwinds as Non-Commercials' Long Positions Reach Record High

The recent gold price surge has been closely tied to the increasing long positions held by non-commercials, who now hold 56.9% of the whole market. According to the CFTC's August report, non-commercials are long 277,159 and short 33,825, resulting in a net position of 243,334 on open interest of 427,957.

This level of concentration is unprecedented, with only three instances since 2018 reaching or exceeding this threshold. The all-time record is 0.81 points away from being reached.

Warsh told Jackson Hole that the PCE (Personal Consumption Expenditures) index has risen to 3.7% on a 12-month basis and 4.1% on a 6-month basis, indicating a Fed hike might be necessary. The author notes that this is not what the current long positions are built for.

The author believes the unwind of the crowded long position is not yet complete and predicts gold could reach $4,280 at the September meeting.