Over the past three weeks, speculative buying has surged into the gold futures market on a scale that has caught widespread attention. Citing Commodity Futures Trading Commission (COT) positioning data, Goldman Sachs futures desk trader Robert Quinn noted that from July 28 to August 18, managed money, other categories, and non-reportable traders collectively recorded net gold futures purchases totaling $22.2 billion, marking the highest nominal amount in over a decade.

This buying wave consists of two components: long position increases contributed $13.6 billion, while short covering added $8.6 billion. As of the statistical cutoff date, net long gold positioning stood at the 93rd percentile within a two-year lookback range.

Meanwhile, Goldman Sachs commodity strategists have previously communicated to clients that there is "significant upside risk" to their year-end 2026 gold price target of $4,900 per ounce.

Three Categories of Funds Enter Simultaneously, CTAs Forced to Cover Shorts

According to Goldman Sachs data, this buying wave was not dominated by a single fund type but involved synchronized participation from three investor categories:

Managed Money: +$10.9 billion

Other: +$8.5 billion

Non-Reportable: +$2.8 billion

Robert Quinn pointed out that macro factors served as the primary catalyst for this buying spree. The Federal Reserve's July FOMC meeting leaned dovish, combined with subdued inflation and employment data, leading markets to scale back expectations for multiple rate hikes in 2026. Concurrently, long-end rates moved higher due to economic resilience, AI capital expenditure, fiscal pressures, and global spillover effects, resulting in a steeper US Treasury yield curve. Long position increases from managed money and other categories showed a positive correlation with the 2-year to 30-year US yield spread (2s30s).

Commodity Trading Advisors (CTAs) also displayed a clear directional shift. Goldman Sachs' CTA model indicated sharply intensifying buy signals—these systematic strategies previously held short gold positions, but as prices broke through key technical levels, they were forced to cover, further amplifying upward momentum.

Treasury Operations Ignite Rally, Gold Surges Nearly 6% in a Single Week

From August 18 to 21, the market experienced fresh acceleration.

The US Treasury announced an expansion of its buyback program for 10-year to 30-year notes, pushing long-end yields higher and causing the yield curve to retrace—the 2s30s spread narrowed by 8 basis points in one week. However, gold did not follow suit with a pullback; instead, it rallied 5.9% for the week, with spot gold (XAUUSD) breaking above $4,500 per ounce for the first time.

According to UBS trading desk S&T specialist Jonathan Garber in a Monday morning report, the Treasury's move was interpreted by some market participants as "an attempt to influence long-end pricing and curve dynamics," triggering concerns about dollar confidence and reinforcing demand for physical assets like gold. He wrote: "Since the US Treasury announcement, we have seen additional buying emerge, and we expect gold to continue moving higher."

Aggregate open interest in gold rose for multiple consecutive trading sessions during this period, accumulating an increase of $8.9 billion.

August 19 (the day after the Treasury announcement) became the most concentrated trading day of the week, accounting for 27% of total weekly electronic trading volume. Hedge funds executed over 30% of their weekly volume on that single day.

UBS: Persistent ETF Inflows and Official Reserve Accumulation Provide Support

In his report, Jonathan Garber noted that gold's rally "has been primarily driven through the futures market rather than the OTC channel," with EFP (Exchange for Physical) premiums remaining elevated and futures positioning contributing the bulk of market strength. He also pointed out that "this divergence explains why prices have risen substantially while client participation and OTC flows remain relatively uneven."

However, UBS views ETF demand as one of the strongest supporting factors currently. Gold ETF holdings have recovered to near their May 2026 highs, with buying remaining consistent throughout the rally, corroborating the price action.

Additionally, the People's Bank of China's gold reserve accumulation pace has hit its fastest monthly record since 2023, indicating persistent official sector demand.

In the lending and funding markets, positive signals have also emerged from Asia: Singapore gold trading premiums are above the OTC market, Asian clients are borrowing London gold, and lending demand extends across tenors from 1 to 18 months.

Options Market Tilts Bullish, but Short-Term Risks Cannot Be Overlooked

The structure of the options market has also undergone a transformation.

Three-month implied volatility for gold has risen, while the 25 delta put-call skew has dropped to a five-month low, meaning calls have become more expensive relative to puts, signaling significantly enhanced demand for upside exposure. Furthermore, realized volatility has recently exceeded implied volatility, highlighting the rapid price swings characteristic of news-driven spot markets.

[Suggested chart: Gold 25 delta put-call skew trend]

However, Goldman Sachs' Robert Quinn explicitly cautioned about risks: the rapid accumulation of bullish sentiment means that if a negative catalyst emerges, the risk of tactical unwinding rises accordingly. He specifically flagged Federal Reserve Chair Warsh's upcoming first public appearance at Jackson Hole—if Warsh signals a hawkish stance on inflation or expresses discomfort with recent market moves, it could trigger position unwinding.

UBS similarly advises patience after the sharp rally, expecting gold to consolidate around current levels, gradually forming a higher trading range rather than immediately trending upward in a straight line.

Prediction Markets: Probability of Reaching $5,000 This Year Exceeds 60%

As gold prices continue to strengthen, odds in prediction markets are also moving rapidly.

According to prediction market data, the market-implied probability of gold reaching $5,000 per ounce this year has jumped from 40% a week ago to over 60% currently.

UBS provides the following near-term technical reference levels:

Resistance: $4,670, $4,770, $4,890

Support: $4,520, $4,380, $4,305