With market focus having mostly been on the Federal Reserve in recent weeks, a banking crisis in Europe began to shake things up heading into quarter-end last week. The recent events surrounding the Bank of England being forced to intervene to shore up its markets is bringing the realization that the trigger for the next recession could very well be abroad.
In response to these events, the gold price has made a key upside reversal from the depths of gold bug despair after reaching a new low for the move last week at $1620. Gold made fresh 52-week lows mid-week, then reversed, taking out the high of the previous week and closing above that level on the last day of the quarter.
With the BoE announcing the continuation of rate hikes while the U.K. economy is in recession, even the United Nations is urging the Federal Reserve and other central banks to ease up on rate hikes this week. The agency is warning that tighter monetary policies are pushing the global economy into a recession.
Gold's net spec short positioning now stands at 43,094 contracts, up nearly 17% from the previous week. Positioning is at its lowest point since November 2018. I expect to see this position being reduced considerably, with room for more shorts to capitulate, when the next Gold CoT report is released later this afternoon at 3:30 EST.