Metals Weekly: Gold ETFs look top-heavy heading into FOMC

Metals Weekly on gold ahead of the FOMC. Our economists expect the Fed to hike 25bp today followed by another 25bp hike in December. While under pressure since Warsh's Jackson Hole speech and a subsequent significant repricing in Fed rate hike expectations, gold has remained somewhat resilient all things considered, helped by continued ETF demand. However, this itself presents a near-term positioning risk, as recent ETF additions since mid-July are starting to look pretty top-heavy, with potentially over 90 tonnes loss-making at prices at or below $4,350/oz. A crystallisation of a more hawkish Fed risks driving a more material crack in gold's resilience as loss-making ETF holdings begin to liquidate, pushing prices towards another defence of $4,000/oz in the near term. This risk keeps us tactically cautious from current levels near term, although a flush towards $4,000/oz or below would eventually present a medium-term buying opportunity, given that the JPM economic base case ultimatel