Gold slips into negative territory as ETF liquidations loom

Standard Chartered’s Suki Cooper notes that the market is increasingly vulnerable to macro headwinds as gold shifts its focus back to real yields. With inflation expectations prompting markets to anticipate a Federal Reserve rate hike, the opportunity cost of holding non-yielding assets has climbed. This shift has already begun to impact investment demand, with exchange-traded product holdings slipping throughout May and June.

The technical picture remains precarious. Cooper highlights that approximately 270 tons of ETP holdings are currently in loss-making territory near the $4,250 an ounce mark. Should prices continue to slide toward $4,000, those underwater positions could swell to 298 tons, potentially triggering further redemptions. While the strengthening U.S. dollar adds another layer of resistance, technical support is now firmly eyed at $4,100 an ounce. Despite these immediate risks, Cooper maintains a degree of optimism for a medium-term recovery.