Who is the mysterious buyer of the gold?

After the Federal Reserve raised interest rates, gold prices did not fall; instead, they broke through the downtrend line since the Jackson Hole meeting—an unusual move that puzzled the market and prompted analysts to ask: who exactly is buying gold?

According to the latest metals fund flow report released by Deutsche Bank, Federal Reserve Chairman Warsh's hawkish remarks had a very limited effect on boosting gold prices. Neither commercial nor non-commercial buying saw a significant increase, CTA (commodity trading advisor) positions remained almost unchanged, CME gold open interest rose only slightly, and although inflows into Chinese ETFs increased, the scale was not particularly outstanding.

In a report, Daniel Ghali, head of metals research at Deutsche Bank, stated bluntly: with no significant effort from any conventional buyers, the driving force behind this round of gold price increases points to a deeper structural force—reserve management institutions.

Deutsche Bank believes that the geopolitical conflict in the Strait of Hormuz has a far more critical impact on gold than Walsh's anti-inflation stance. For reserve management institutions, the reserve reallocation space released by a synchronized decline in energy prices is more substantial than several interest rate hikes. This logic brings the correlation between gold and oil prices to the forefront and forms the core framework of the bank's judgment on gold price trends.

The absence of regular buyers has revealed a mysterious buyer.

Deutsche Bank’s real-time tracking of spot fund flows through its global aggregated electronic trading platform Autobahn™ shows that in the latest trading session following the Federal Reserve’s interest rate meeting, there was no significant inflow of commercial and non-commercial buying that had previously supported the market and hedged against retail fund outflows.

Meanwhile, CTA positions remained largely unchanged during this period, CME gold open interest rose only marginally, and while inflows into Chinese ETFs showed an upward trend, the pace of inflows was not unusual.

Despite the lack of significant support from conventional funding sources, gold prices have managed to break through the downward trend since Jackson Hole. This divergence has led Deutsche Bank to raise a key question: Who are the mysterious buyers in this rally?

Reserve management agencies: Geopolitics and oil prices are the key variables.

Deutsche Bank's answer points to reserve management institutions. The report indicates that the geopolitical tensions triggered by the Strait of Hormuz conflict have a far greater impact on reserve management than the Federal Reserve's interest rate hike path itself.

For reserve management institutions, the simultaneous decline in energy prices has a more direct policy implication—lower oil prices mean reduced foreign exchange earnings for energy-exporting countries, increased pressure on reserve allocation, and consequently, increased attractiveness of gold as a non-sovereign reserve asset.

Deutsche Bank concluded that gold's sensitivity to oil prices is increasing, and this correlation is reinforced through three pathways: Federal Reserve policy decisions, reserve requirement ratio buying, and geopolitical factors . The report also points out that active investors in the market currently have relatively light positions, and structural demand persists, making it difficult for gold to experience a significant sell-off even under negative pressure.

CTAs still favor selling; algorithmic pressure cannot be ignored.

Despite some resilience in gold prices, Deutsche Bank warned that current price increases are insufficient to change the overall selling bias of CTAs in the coming week.

The report points out that algorithmic trading systems tend to sell precious metals in the coming week under almost all price scenarios. Deutsche Bank's senior positioning analysis shows that the skewed selling activity by CTAs is not directly related to the hawkish Fed meeting itself. Some market participants interpret it as a "lagging reaction to a hawkish FOMC," but the bank believes this interpretation is inaccurate.

Among the precious metals, palladium is considered the most vulnerable due to a significant and continuous outflow of spot funds over the past month; silver is relatively resilient, benefiting from the continued existence of arbitrage opportunities and a steady inflow of retail buying; platinum also faces risks, and in the absence of any scenario that could trigger large-scale algorithmic buying, once prices correct, the scale of CTA selling could reach 20% to 40% of its historical maximum position.

Faced with this complex situation, Deutsche Bank maintains its existing operational framework: in the coming week, if crude oil prices rise, it will buy gold on algorithmic selling pressure; if crude oil prices show signs of reversal, it will actively go long on gold. The core logic of this strategy is that the correlation between gold and oil prices has become the main pricing anchor for the current market, rather than the traditional interest rate-driven framework. Before the structural buying by reserve management institutions is fully reflected in public data, oil price movements will be the most forward-looking reference indicator for judging the direction of gold.

~~~~~~~~~~~~~~~~~~~~~~~

The above content is from Zhuifeng Trading Platform .

For more detailed analysis, including real-time updates and firsthand research, please join the [ Trading Channel Annual Membership ].

Risk warning and disclaimerInvesting involves risk; please exercise caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Any investment decisions made based on this information are at your own risk.