Is Gold’s Bull Run Over? Longs Flee, But Shorts Refuse to Chase

Gold’s three-year bull trend is showing clear signs of fatigue, with the ongoing pullback driven largely by aggressive long position unwinding. Notably, the market has yet to see meaningful short positioning buildup, suggesting the correction is not led by bearish aggression.

After topping near $5,600/oz in January, gold faced a steep downside reversal. Bloomberg-tracked gold ETFs have registered nearly $18 billion in outflows. Prices slid below $4,000/oz in June, notching the steepest monthly decline in nearly 20 years and prompting broad caution over the sustainability of the long-term bull run.

TD Securities senior commodity strategist Bart Melek notes the current selloff is almost exclusively driven by long liquidation. Institutional short positions remain near historic lows, which leaves room for further downside pressure if selling momentum extends.

Short Positioning Remains Subdued, Leaving Downside Flexibility

Latest NY futures data indicates asset managers have refrained from active short building, with only a negligible tilt toward bearish positioning in recent weeks.

Melek emphasizes that the lack of short exposure means the market still holds plenty of leveraged long positions vulnerable to further unwinding, while short-side positioning has ample room to expand. CTA funds have only pared long holdings without initiating broad short bets.

Persistent USD and yield strength, alongside a hawkish Fed stance, could push systematic and speculative funds to add short exposure, potentially accelerating gold’s corrective move.

ETF Outflows Become Core Marginal Price Driver

Geopolitical tensions fueled inflation fears and Fed hike expectations, eroding gold’s appeal against interest-bearing assets and triggering continuous ETF redemptions.

Per JPMorgan, ETF investors have become gold’s key marginal pricing force amid fading other demand. The bank sharply reversed its 2026 outlook, now forecasting 50 tonnes of net ETF outflows versus a prior 400 tonnes of inflows.

While warning rate headwinds will cap gold prices near-term, JPMorgan still maintains a positive long-term outlook for the metal.

Central Bank Purchases Continue to Underpin Gold

Despite sporadic official gold disposals from individual countries, global central banks accelerated gold purchases in Q1, with continued accumulation intentions. Notably, China has extended its monthly gold buying streak to 20 consecutive months, offering key long-term support.

Market Sentiment Weakens, Long-Term Bull Thesis Remains

Wall Street institutions have dialed back gold forecasts amid fading bullish momentum. Even so, the core long-term bullish fundamentals remain intact, with a renewed rally likely awaiting a softer U.S. dollar and resurgent currency devaluation pressures.

Gold has stabilized above $4,000/oz recently as markets temper Fed hike expectations. Some institutional investors are adopting a dip-buying stance, awaiting clearer trends in interest rates and the U.S. dollar before boosting allocations.