Money Managers Are Buying Gold Again

According to the latest Commitment of Traders, Gold Managed Money positioning started to recover from the long-term impairment suffered in late January / early February. 

Specifically, top Goldman Sachs futures trader, Robert Quinn, notes that Gold Managed Money net purchased +$1.4bn from February 10th - 17th, ending a 3 week streak of selling which totaled -$22.9bn.

New longs (+$2.0bn) overpowered coincident short selling (-$560mm).

Buying seemingly persisted in the subsequent 5 sessions. 

Over February 17th - 24th, Gold rose +5.5%; aggregate open interest (OI) augmented +$6.7bn; 3 month implied volatility richened; and normalized 25 delta put-call skew cheapened. 

Elevated stagflation risks, following the US Administration's response to the Supreme Court ruling on IEEPA and a potential Middle East conflict, provided support. 

During this time, general tariff uncertainty increased.

The Supreme Court's invalidation of IEEPA tariffs caused the administration to announce new measures under Section 122 and reconsider sectoral levies.

Furthermore, the US threatened military strikes against Iran should talks stall.

As a result, GS's Long/Short Stagflation and Geopolitical equity baskets jumped +3.9% and +2.7% respectively.

That said, bulls are trading very tactically; some profit taking ensued on the eve of US-Iran negotiations. 

Gold prices survived a retracement in Long/Short Stagflation on February 25th.

However, Gold futures OI dropped -$4.5bn; implied volatility declined; and skew bounced.

Thus longs liquidated... but prices are stabilizing.

While ETF investors continue to charge ahead, Money Managers refuse to believe the rally is real...

Will it be different this time?

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