Episode summary
Gold Slump Eases as Traders Weigh Unwinding of ‘Crowded’ Bets
Bloomberg Surveillance
· · 6 min · Guests: James Steel, Robert Gottlieb, Zijie Wu, Dominik Sperzel, Daniel Ghali, Michael Hsueh, Rhona O’Connell
Summary
Gold and silver’s sharp reversal was framed as the result of an overcrowded trade finally meeting bad news. The guest said the parabolic rally had pulled in new buyers for many months, leaving the market vulnerable to profit-taking and liquidation once developments turned against precious metals. He called the pullback a big and deserved correction after extraordinary volatility on both the upside and downside.
He put the move in historical context by saying gold’s latest highs finally surpassed its 1980 peak in real terms, and that the swing in just a couple of days was equal to the absolute price level gold traded at when he first covered it. Even after the selloff, he said the research view still points to a moderately softer dollar and a potential resumption of central bank buying, which helped drive the rally in 2022, 2023 and 2024.
The guest said his year-end high for gold is 55, but he expects a wide range and thinks good news could push prices closer to $4,000. He argued that gold is not like oil because supply cannot respond quickly, while recycling may increase if prices ease. He also said gold’s main macro role is as a signal of geopolitical and economic risk, not as a direct driver of the economy.
Key takeaways
- The guest said gold and silver were hit by a crowded trade that left the market vulnerable to liquidation on any negative catalyst.
- He said gold’s rally became a genuine real-terms breakout only after it moved above the 1980 peak in April last year.
- The guest’s year-end gold high is 55, but he sees a wide range and says good news could pull prices toward $4,000.
- He expects a moderately softer dollar and a possible resumption of central bank buying to support the market.
- The guest said gold is a risk signal, not an economic driver, and that recycling could pick up if prices stay lower.
Notable quotes
“any commodity that has this parabolic rally that gold and silver had and the new entrants into the market”
“it really does invite a volatility and be profit taking stroke, liquidation on any news or developments that run counter to gold”
“the difference between now and 79 was a limited number of buyers at that time. One brothers especially and silver, but also a much more broad based church this time”
“Our high for the rest of the year is 55. We have an average, which is almost where it is now”
“gold does not have huge macro economic impacts. It reacts to macro. Right”
How the episode opens
Well, I think you've effectively hit the head on the nail for the immediate reason. I mean, any commodity that has this parabolic rally that gold and silver had and the new entrants into the market, which be they were flooding in and have been for many, many months now, it really does invite a volatility and be profit taking stroke, liquidation on any news or developments that run counter to gold. And we had a couple of them within a few days and it really did give us a big and deserved, I think, correction in both gold and silver.
James, you've been at this precious metal game for decades now. Just put into context the volatility both on the upside and then the downside on Friday. There's a handful of days or just extraordinary volatility.
Just put that into context. Well, yes, you're right. And it's extraordinary.
And and so and so was a rally. Yeah. You know, we were talking about that.
You go back to 54, I think new highs last year. Right. And people are talking about a new high.
A new high. And I always cautioned everyone, I said, look, it's not a new high until we go above in real terms what it was in 1980. In January of 1980, gold hit $850 an ounce, and that's about 30 $400 in today's.
There you go. And they did that in April last year. And then I said, okay, now we can genuinely talk about a new high.
We can generally talk about a real rally. And and the difference between now and 79 was a limited number of buyers at that time. One brothers especially and silver, but also a much more broad based church this time a lot of a lot a lot in it but the volatility nonetheless.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- gold slump
- silver selloff
- crowded positioning unwind
- fed independence and warsh nomination
- chinese retail and speculator demand
Companies and tickers mentioned
- HSBC
- JPM
- TD
- DB
- SNEX
- HSBC
- JPMorgan Chase & Co.
- Jinrui Futures Co.
- Heraeus Precious Metals
- TD Securities
- Deutsche Bank AG
- StoneX Financial Ltd.
Watch the episode
Watch “Gold Slump Eases as Traders Weigh Unwinding of ‘Crowded’ Bets” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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