Deutsche Bank's Ghali Highlights Gold's Resilience Amid Market Pressures

Daniel Ghali, head of metals research at Deutsche Bank, stated in an interview that gold is currently oversold and underowned, making it an attractive investment for the upcoming year. Despite the pressures from rising U.S. 10-year Treasury yields exceeding 5% and oil prices surpassing $100 per barrel, gold has not set a new low since July. Ghali noted that this resilience indicates strong price action and suggests that central banks are quietly purchasing gold, absorbing the selling pressure in the market.

Ghali's analysis points to a significant increase in official-sector demand for gold, which has more than doubled compared to the pace seen in 2021 and 2022. He highlighted that trend-following funds are holding their largest net short position since October 2021, while discretionary long positions have decreased by approximately 55% since June. This positioning, described as nearing capitulation, reflects a market dynamic that could lead to increased volatility in the near term, particularly with the thin liquidity expected during China's Golden Week holiday.

At the London Bullion Market Association's annual conference in Sorrento, Italy, Ghali urged investors to consider buying gold, although he warned that a final flush lower could occur before a market base forms. His outlook for other metals is mixed; while silver is facing oversupply, copper is experiencing its tightest market conditions since the 1980s, which Ghali believes presents the largest potential gains in the near and medium term.

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Source: KLEA News