Gold: Hi, I'm back in the office after some time in India on business and some holiday in Edinburgh for the @edfringe (I'd highly recommend both, btw). I note that gold has fallen below $1200/oz in my absence so here are a few comments (1/8)
Gold: Firstly, I would point out the obvious: gold has fallen as the US dollar has strengthened. There's nothing strange about this, its the 'usual' relationship. (2/8) 
Gold: Secondly, there is no sign of any major US financial market concerns - here is a chart of US high-yield spreads - nothing to indicate worry here. Similarly, Libor-OIS (not shown). (3/8)
Gold: Despite some tech wobbles, the S&P500 remains near all-time highs, another indication of a lack of US market concerns. (4/8)
Gold: What has been pointed out by others is that Managed Money net positions on Comex are at their most extreme short levels since this CFTC data series started in 2006. (5/8)
Gold: Looking at the long side of the net position, yes there has been a decline in Gross Long positions, although nothing extraordinary by historic standards. (6/8)
Gold: What is unprecedented is the short side of the equation. Gross shorts are at all-time highs, and as this chart shows, this is a big move. (7/8)
Gold: Now extended short positions don't mean much in themselves: if the US dollar continues to strengthen (and US financial markets remain unruffled), gold could head lower. But if either of these things change, covering by shorts could see gold move sharply higher. (8/8)
@threadreaderapp please unroll
