Gold's Short Squeeze Enters Phase Two: Macro Signals Align with Technicals
The gold market has entered phase two of its 'short squeeze', with macro signals aligning with technical indicators. The 21-day and 50-day moving averages have formed a bullish crossover, indicating a medium-term trend continuation.
Gold's price action is almost perfectly synchronized with Fed rate pricing, according to Goldman Sachs data. This convergence suggests the market is repositioning gold as a core hedge against global macro risks.
Fund flows are also showing positive signals, with Bank of America data indicating gold inflows have posted their largest weekly figure since January this year. Western active long-side investors are returning to the market, further improving fund flows.
Goldman Sachs analyst Ankush Gupta notes that the metals rally is clearly led by China, with participation on Asian exchanges jumping from single-digit percentiles to around 50%. This influx of funds has forced significant short covering and driven gold prices in an unusually smooth, near-linear advance.