Eben@CANSLIM ResearchDeutsche Bank’s metals research team argues that gold has reached selling exhaustion, holding roughly flat even as the Federal Reserve officially begins a new hiking cycle, US 10-year yields breach 5% and crude trades north of $100/bbl. The bank’s Head of Metals Research, Daniel Ghali, expects CTA selling across the precious complex to persist over the coming week and frames that weakness as a buying opportunity. If gold cannot sell off even as the bells ring loudest, Deutsche Bank expects it to outperform on a pivot.
Key Takeaways
- Deutsche Bank’s Daniel Ghali says gold prices are roughly unchanged even as the Fed kicks off a hiking cycle, with US10y yields above 5% and crude above $100/bbl.
- Deutsche Bank’s aggregated e-trading flows show limited spot outflows from gold over the last session, supporting the selling-exhaustion thesis.
- CTAs are selling up to -7% of their maximum size in gold below $4360/oz, and Deutsche Bank expects that algo selling to continue over the coming week.
- Deutsche Bank flags palladium as most vulnerable after spot inflows hit -30% of max size, while silver appears least vulnerable on strong Shanghai arbitrage and retail inflows.
- Deutsche Bank says CTAs are already back to ‘max long’ in copper and expects acute scarcity in global copper markets over coming months.
What Deutsche Bank’s “When the Bells Ring Loudest” Report Says About Gold
In a commodities research note titled “When the Bells Ring Loudest”, Deutsche Bank’s Head of Metals Research Daniel Ghali, CFA, argues that gold is displaying remarkable price strength despite the loudest possible macro headwinds. The report notes that at the turn of the month, the team argued for selling exhaustion in gold only days after Jackson Hole shifted rate-market expectations towards a new and imminent hiking cycle. Gold prices remain roughly unchanged even as the Fed formally begins that cycle.
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