Gold May Not Be The 'Safest Haven'; Goldman Futures Trader Warns

According to Commitment of Traders (COT), speculative Gold demand underwhelmed at the onset of the Iran War. 

During February 24th - March 3th, Managed Money purchased just +$470mm of Gold futures. New longs (+$830mm) were partially offset by shorts (-$360mm). 

Instead, as top Goldman Sachs futures trader, Robert Quinn, notes, the Dollar reigned supreme. 

Over the COT observation window, DXY Index rose +1.2%, outperforming the April Gold contract (-1%).

Per GS FX Research, a "deterioration in risk sentiment sparked by a global event and energy disruption supported the Dollar for both technical and fundamental reasons […] the relatively self-reliant US could be "exceptional" once again."

As the conflict progressed, the Dollar rally stalled, and Gold bounced alongside other related proxies. 

From March 3rd - 11th, DXY traded sideways, enabling Gold to strengthen (+1.1%) with Brent Oil (+13%) and GS's Long / Short Stagflation basket (+1.0%).

Still, various Gold flow indicators exhibited mixed sentiment. 

Gold futures aggregate open interest climbed +$5.1bn.

But, the EFP softened. Furthermore, short-dated normalized 25 delta put-call skew richened. In fact, 1 month levels reached the top 1 year decile.

Relatedly, ETF holders liquidated.

Thus temporarily, Gold may not be the safest haven. 

Bulls are prioritizing cash before re-engaging for the next leg higher.

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