Demand Signals And Positioning
TD Securities added that the largest traders in SHFE gold have modestly reduced long positions. It said retail demand has eased since what it described as unprecedented purchases in January. It listed three factors behind the lack of inflows: fewer expectations for US Federal Reserve rate cuts, reduced gold purchases by Middle Eastern nations, and broader institutional ownership. The firm based the ownership point on analysis of 13F filings, stating gold is held by a large majority of institutional holders. The expected safe-haven buying in gold has failed to appear, despite the recent geopolitical shock. We see the market is far more focused on the Federal Reserve’s intentions than on global conflict. The latest core CPI data for February 2026 came in at a stubborn 3.1%, forcing markets to price out any rate cuts until at least the third quarter. This explains why money is not flowing into gold, with trading volumes looking more like a quiet summer day than a crisis response. We’ve seen major ETFs like the SPDR Gold Shares (GLD) experience net outflows of over $1.5 billion in the first two months of 2026 alone. This lack of new money from large funds and retail traders is putting a firm ceiling on prices. For derivative traders, this suggests that strategies benefiting from a sideways or downward trend are more logical right now. With gold trading around $2,250 an ounce, selling out-of-the-money call options or establishing bear call spreads above the $2,300 resistance level could capture value from this stagnant price action. The low participation means a powerful, unexpected rally is unlikely without a significant change in Fed policy.Implications For Gold Prices
This environment reminds us of what we observed looking back at 2022, when an initial war premium was quickly erased as the market’s attention shifted back to aggressive rate hikes. The “debasement” narrative that drove significant buying through 2025 is now unwinding as the dollar stays strong. This makes holding a non-yielding asset like gold less appealing for now. We must also recognize that gold is no longer a fringe asset, with most large institutional investors already holding their desired positions. This broad ownership offers a floor of support but also limits the potential for the kind of explosive rallies driven by new buyers. This suggests that price moves will likely be more contained in the weeks ahead. Create your live VT Markets account and start trading now.
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