Earth to macro funds. There is no magical reason why Fed cuts have to led to higher Gold prices, TDS’ Senior Commodity Strategist Daniel Ghali notes.

Gap risk is elevated

“Ultimately, Gold markets are a function of buyers and sellers, and our suite of advanced positioning analytics is screaming for caution on several fronts. Macro fund positioning is now at its highest levels on record, slightly surpassing levels printed in the weeks that followed the Brexit referendum. There are nearly no directional money manager shorts remaining.”

“Shanghai traders are still holding onto their record length, but Chinese investors now have several alternatives at their fingertips and currency devaluation fears have abated. Asian physical traders are on a buyer's strike. Central bank buying activity has ground down to its lowest levels in the last five years. Consensus is unanimously bullish.”

“Recent price action has been a function of limited selling activity, which potentially points to a liquidity vacuum given the challenge to Western positions from US rates markets and the broad dollar.”