Goldman Sachs Points to Position Unwinding as Gold’s Main Drag

Goldman Sachs’ analysis identifies five straight weeks of speculative net outflows as the main driver of gold’s decline, rather than changes in real interest rates. The outflows began Sept. 22 and totaled $19.5 billion, adding detail to an earlier look at gold and silver pullbacks that also discussed speculative positioning.

From Oct. 20 to Oct. 27, speculative traders were net sellers of about $8 billion in gold positions. About $5.2 billion came from closing long positions, while $2.8 billion came from opening new short positions.

Other traders and non-reportable traders accounted for about 95% of the outflows that week. As of Oct. 27, long positions held by those categories remained above the median level recorded over the preceding two years, leaving room for further unwinding, Goldman Sachs’ analysis said. Separately, bearish options bets and demand for downside hedges increased from Oct. 27 to Oct. 30, signaling a rise in short-term bearish sentiment.