According to external sources, there has recently been a round of centralized exits from the gold market led by short-line leverage. According to the article, such sales are more like passive silos than new investor judgements about the long-term value of gold. What is more noteworthy next is not short-line fluctuations per se, but who will take over the dumps.
Leverage flattens down.
According to the article, the fall was characterized by a typical “surrender sale”. Prices fluctuated in a negative direction, then triggered additional bonds and loss or loss orders, some of the warehouses were automatically flatted, and brokers were proactive in reducing risk exposures. Successive sales boards further depressed prices, which in turn triggered a new round of silos.
These movements are different from the usual sales. The core is not a sudden deterioration of the fundamentals, but a concentration of high leverage positions under pressure. The more crowded the warehouse, the faster the chain reaction, the more vulnerable the market is.
A similar situation occurred in 2022.
According to the article, the gold market was similar in 2022. At that time, the sale, led by a consultant for commodity transactions, caused rapid price deviations, but after a period of forced sales, structural purchases re-entered the market and the price of the gold recovered.
It follows that the withdrawal of short-term funds does not necessarily mean that the long-term narrative of gold has changed. It is more like a violent silo that is common in cattle markets, which often appears to be confusing and it is difficult to confirm at the moment that it is over.
We'll see who's gonna take it.
The article argues that what really determines the next stage is whether institutional investors and sovereign funds enter the market. Buyers, including central banks, sovereign wealth funds and long-term financing, usually do not pursue short-line momentum, but tend to increase when prices fall.
If such funds continue to be held off-site, the market may gradually stabilize and form a clearer bottom signal. On the contrary, if long-term buyers are not present, gold may remain on the fence for some time, awaiting the formation of a new equilibrium.
From this perspective, the withdrawal of short-term speculative funds is only the first step. The more important signal is whether there is a stable and continuing real need after release.