Citi says gold’s breakout is spec-driven and hinges on Jackson Hole

Investing.com -- Citi told clients in a note Tuesday that gold's latest rally has cleared key technical resistance but has been driven largely by speculative flows, leaving it vulnerable ahead of Chair Kevin Warsh's Jackson Hole speech.

Prices were boosted by a weaker dollar and lower rates after the U.S. Treasury announced increased long-end buybacks, the bank said.

Gold found a solid bottom near $4,000 an ounce from late June through July, rebounded in August and consolidated around its 100-day moving average of roughly $4,380 before breaking out.

Citi highlighted that technical indicators including MACD and DMI remain positive, while an RSI near 72 points to stretched but not extreme levels. That is consistent with CFTC data showing managed money net length close to year-to-date highs but still below 2024-25 peaks.

"The recent rally has been largely driven by spec flows so far, in particular futures inflows. Physical demand will need to catch up, in our view, for the rally to sustain," Citi wrote, noting the bulk of gains came during U.S. trading hours while prices were flat to lower in Asia and Europe.

Chinese retail demand is said to remain weak, with investors range-trading rather than trend-following, while Indian premiums stay negative.

Citi called Jackson Hole a binary risk, with a hawkish Warsh likely halting the rally, though the bank would buy dips in the low $4,000s, while a dovish surprise would be "ultra-bullish."

You May Also Be Interested In

• Select Water stock surges 28% on Pilot Water acquisition deal
• Prime Medicine stock surges on FDA IND clearance
• Needham remains cautious on Nike stock, sees more downside risk