Gold’s breakout above $4,380 an ounce has been fueled primarily by speculative flows, with Citi warning that the rally lacks broad-based support from physical demand. The bank’s latest note, published Tuesday, highlights that managed money net length in gold futures has climbed to near year-to-date highs, though it remains below peaks observed in 2024 and 2025. The metal consolidated around its 100-day moving average before surging in August, with technical indicators such as the MACD and DMI pointing to sustained upward momentum.
The recent price action has been concentrated during U.S. trading hours, while Asian and European sessions saw flat to lower activity. Citi noted it would view dips into the low $4,000s as buying opportunities, though the bank emphasized that a sustainable rally would require stronger participation from physical buyers. Chinese retail demand has remained subdued, with investors adopting a range-trading approach rather than following a clear trend, while Indian premiums have stayed negative.
The Jackson Hole Economic Symposium is positioned as a critical catalyst for gold’s next move, according to Citi. A hawkish speech by Federal Reserve Chair Kevin Warsh could derail the rally, while a dovish surprise would likely amplify the upward momentum. The bank described the event as a "binary risk," underscoring the sensitivity of gold prices to shifts in monetary policy expectations. The U.S. Treasury’s announcement of increased long-end bond buybacks has also contributed to the weaker dollar and lower rates environment, providing additional tailwinds for the precious metal.
