Gold reversed hard last week after blasting higher for a month, leaving traders wondering why and what that portends. The answers are found in gold’s dominant short-term driver, speculators’ collective trading in gold futures. Their positioning has grown excessively bullish, they are essentially all-in betting on more gold upside. That spawned a massive and ominous gold futures-selling overhang, which needs to be normalized.
Since gold futures trading is so esoteric, most investors and speculators ignore it. That’s a big mistake, as gold’s near-term price action is overwhelmingly driven by what speculators are doing in gold