It is recalled here that long positions reached a record of 324,857 contracts earlier this month, according to Bloomberg data dating back to 2015.
Gold’s rally was fueled by huge bets from Chinese speculators, according to data analysis by the Financial Times, which showed Asian traders are beginning to eclipse their Western counterparts in the gold market.
Long gold positions held by futures traders on the Shanghai Futures Exchange (SHFE) rose to 295,233 contracts, equivalent to 295 tonnes of gold. This marks a nearly 50% increase since late September before geopolitical tensions escalated in the Middle East.
It is recalled here that long positions reached a record of 324,857 contracts earlier this month, according to Bloomberg data dating back to 2015.
One trading firm, Zhongcai Futures, has amassed a bullish position in SHFE gold futures equivalent to just over 50 tonnes of the metal — worth nearly $4 billion and equivalent to more than 2% of China’s gold reserves. central bank.
Gold volumes on the SHFE rose to more than five times last year’s average to 1.3 million lots on the peak day of trading last week, a trading frenzy that analysts said explained gold’s record rally of more than $2,400 an ounce this month.
“Chinese speculators have really grabbed gold by the throat,” John Reade, head of market strategy at the World Gold Council, told the FT.
“Emerging markets have been the biggest end consumers for decades, but have not been able to exert pricing power because of the West. Now, we’re getting to the stage where speculative money in emerging markets can have pricing power.”
The gold rally
Gold has rallied more than 40% since November 2022, supported by record purchases by emerging market central banks seeking to diversify their holdings away from the US dollar.
The metal, which is often used as a hedge against inflation and currency depreciation, has been further boosted by a sense of the safe haven it provides since the Israel-Gaza conflict erupted in October. Thus, it touched an all-time high of $2,431 per ounce last week.
Even so, the scale of the rally surprised many analysts, who pointed out that the rise contrasted with outflows from US and European mutual fund markets.
Instead, some point to activity on the SHFE and the Shanghai Gold Exchange – where trading volumes in a benchmark contract have doubled in March and April from last year – as a key driver of the rally as Chinese investors aim to diversify from the crisis them – namely the real estate sector and the stock market crash.
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