Gold heads into Monday having risen over 3% last week to a five-month high of almost $1,981 per ounce. Arguably, more supportive data is needed to push much closer to $2,000.
The most recent (17 October) CFTC Commitment of Traders report published late on Friday revealed that speculative money managers have flipped from a net short to a net long futures position, while other speculators have trimmed net longs.
Overall, net longs have recovered somewhat, but are barely over half the level seen in mid-July when gold prices were at similar levels, suggesting caution over further momentum. Gold funds continue to see net outflows since July.
Technical positioning aside, the markets’ ongoing assessment of the risk environment will be a key determinant of gold pricing going forward. Given difficulties in pricing (rising) geopolitical risk with any precision, this manifests itself as a ‘risk premium’ to safe-haven assets, such as gold.
More fundamentally, incoming data during the course of the week is also likely to be impactful on gold pricing, particularly points that touch upon the inflation and interest rate outlook. Key releases this week include:
Wednesday: The Australian Q3 inflation rate is expected to continue moderating from a Q1 high, while the Bank of Canada (BoC) should keep rates on hold at a 5.0% peak for this cycle.
Thursday: ECB interest rate decision and following press conference. Like the BoC, the ECB is expected to have already reached peak policy rates at 4.5%.
Friday: US PCE Core Inflation for September, which is expected to show an uptick.
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