The near-vertical surge in precious metals (arguably driven by speculative demand from China) came to a swift halt at the end of January, when silver suffered its biggest daily drop on record and gold plunged the most since 2013.
The report covering January 27th - February 3rd, which included a -11.4% drop post Trump's nomination of Kevin Warsh for Fed Chair, displayed-$13.7bn of Managed Money selling, driven mostly by liquidation (-$12.1bn).
This marked a 10 year notional record and corroborated the plummet in aggregate open interest.
Over subsequent sessions, elevated price volatility caused additional long unwinds, consistent with flow models for systematic investors.
From February 3rd - 5th, Gold price and open interest lost -0.9% and -$4.3bn respectively. GS Futures Strategists' CTA model estimated some Gold selling. Similarly, the risk parity framework projected widespread commodity liquidation.
However bulls eventually returned alongside renewed Dollar weakness.
After initially proving resilient through Mega-Cap Tech weakness, the broad Dollar index lost -1.0% during February 5th -9th, enabling a +3.9% Gold bounce.
Catalysts included the US administration's signaling of an imminent soft labor report plus Chinese regulators' advice to curb holdings of US Treasuries.
Source: ZeroHedge News
