Chinese Gold ETF outflows signal holiday-liquidity risks, not trend shift – TDS

Chinese Gold ETFs recorded their largest outflows in 264 trading sessions, TDS' Senior Commodity Strategist Daniel Ghali notes.

Macro catalysts could reignite Gold rally despite pause

"These outflows were (1) not particularly large, at -80koz and (2) likely related to profit taking ahead of the holidays, but highlight vulnerabilities associated with China's holiday-induced liquidity vacuum. Unfortunately for the bears, these vulnerabilities cannot be exploited without Western speculators outright shorting Gold. Western traders have no scope to sell."

"Macro funds remain largely net flat into a recessionary/stagflationary narrative. CTAs won't sell in any scenario for prices. Gold may well be overbought, but it's under-owned."

"The buying impulse that drove the melt-up may now have subsided, but several catalysts on the horizon could reignite it. Look for signs of Asian currency depreciation, or rising recession/stagflation odds to push on the gas pedal."