Central bank buying activity has shrunk significantly. After all, the rise in Gold prices — not volumes —has done the heavy lifting in raising the percentage of reserves held in Gold, TDS' Senior Commodity Strategist Daniel Ghali notes.

Dedollarization narrative fades as BRICs+ halt Gold purchases

"The dedollarization theme remains pervasive in analyst commentary and market views, but likely has not been a relevant driver for several months. Decomposing central bank purchases suggest that buying activity from BRICs+ nations has ground to a halt, leaving Eastern European nations as the primary drivers of inflows relating to central banks, which is more likely unrelated to dedollarization."

"CTA selling activity related to vol-control has likely peaked, but this will not lead to large-scale purchases ahead at any price. The debasement trade has fueled epic fund flows via macro funds and retail participants alike, but we continue to see a poor risk/reward on dollar debasement into year-end, given a potential inflection point in the narrative ahead driven by the upcoming Supreme Court hearings."

"Positioning data for levered participants remains captive to the government shutdowns, obscuring the read on whether sufficient outflows have already occurred. However, the positioning data currently available from our proprietary models and ETFs only point to limited liquidations thus far. Zoom out: everyone wants to buy the dip, but this may not yet be a dip worth buying."