--- title: "$22 Billion Floods into Gold in Three Weeks as \"Currency Devaluation Trade\" Gets Crowded: How Much Further Can This Rally Go?" type: "News" locale: "en" url: "https://longbridge.com/en/news/296780395.md" description: "The weakening U.S. dollar and expectations of currency devaluation have resonated, with Treasury Secretary Bessent’s efforts to \"save U.S. Treasuries\" unexpectedly igniting the gold rally. Over the past three weeks, gold futures have seen record inflows exceeding $22 billion, leading to rapidly crowded positions. Wall Street warns that gold’s drivers have shifted from fundamentals to momentum chasing, with hawkish signals from Jackson Hole posing a risk of a short-term pullback" datetime: "2026-08-24T11:28:30.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/296780395.md) - [en](https://longbridge.com/en/news/296780395.md) - [zh-HK](https://longbridge.com/zh-HK/news/296780395.md) generator: "portal-rs" --- # $22 Billion Floods into Gold in Three Weeks as "Currency Devaluation Trade" Gets Crowded: How Much Further Can This Rally Go? The weakening U.S. dollar and expectations of currency devaluation have resonated, driving a rapid surge in gold prices recently, but the market structure has quietly shifted. U.S. Treasury Secretary Bessent’s policy stance aimed at suppressing long-end yields has reinforced the logic behind the weak dollar and currency devaluation trade, leading to a sharp rise in gold. **Over the past three weeks, speculators have cumulatively bought over $22 billion worth of gold futures, marking the largest single increase in open interest in over a decade. Net long positions have risen to the 93rd percentile of the two-year historical range.** However, as positions rapidly shift from extreme underweighting to crowded levels, the nature of gold trading is undergoing a fundamental transformation—the driving force is gradually switching from fundamentals and position repair to momentum chasing and systematic buying. Technical indicators show clear overbought signals, while potential hawkish remarks at the Jackson Hole meeting constitute the primary risk for a short-term pullback. ## Position Squeeze Fully Realized as Record Buying Floods In The starting point of this gold rally was historically low positioning. According to Quinn data, speculators bought a total of $22 billion in gold futures over the past three weeks, with new long positions contributing $13.6 billion and short covering contributing $8.6 billion. Net long positions are now at the 93rd percentile of the two-year range. This aligns closely with previous market assessments. In early August, market observers noted that gold positioning remained relatively low by historical standards, suggesting ample room for a position squeeze if prices broke out upward. Today, this squeeze scenario has fully played out. Meanwhile, large-scale entry by Commodity Trading Advisors (CTAs) into systematic buying has further amplified upward momentum. On August 5, the market noted that CTAs still held net short positions in gold and predicted that once a breakout was confirmed, systematic buying would provide significant upward convexity to the trend. Since then, the scale of CTA buying has far exceeded expectations. ## Sentiment Reversal in Options Market as Upside Skew Sharply Repriced Structural changes in the gold options market clearly reflect the shift in investor sentiment. Although implied volatility has remained relatively contained during this gold rally, the skew has undergone dramatic repricing—investors have shifted from urgently hedging downside risk to actively pursuing upside exposure, willing to pay significant premiums for call options. At the same time, open interest has risen in tandem with prices, indicating that the current rally is driven not merely by short covering, but by the continuous entry of new risk capital, further solidifying the market foundation for the uptrend. ## Macro Catalysts Fade as Momentum Takes the Wheel The initial phase of this gold rally was highly synchronized with the steepening of the U.S. Treasury yield curve (widening 2s30s spread)—expectations of short-end rate cuts combined with rising long-end yields formed the macro narrative for gold’s rise. However, this correlation has recently decoupled significantly: the 2s30s spread narrowed by 8 basis points due to U.S. Treasury buyback operations, while gold rose another 5.9% during the same period. This suggests that while macro factors may have ignited this rally, positional momentum and price trends are increasingly becoming the dominant forces. This structural shift also brings clear tactical risks. If Federal Reserve Governor Warsh pushes back against recent market trends at the Jackson Hole meeting, releasing hawkish signals to rebuild the Fed’s anti-inflation credibility, it could trigger rapid unwinding of short-term positions, constituting the most notable near-term tail risk currently. ## Clear Overbought Signals: Easy to Rise, Hard to Chase in the Short Term Judging from both technicals and positioning, gold is currently in a clearly overbought zone. The usual market rule is that overbought conditions can persist far longer than most people expect, but this also means that the window for low-risk entry in the short term has basically closed. The fundamental logic of the devaluation trade remains valid, but when everyone crowds into the same trade simultaneously, the risk-reward ratio is no longer what it used to be. For investors, the focus should now be on the vulnerability of momentum trades to external shocks, rather than the potential for further chasing gains. ### Related Stocks - [GLDM.US](https://longbridge.com/en/quote/GLDM.US.md) - [GLL.US](https://longbridge.com/en/quote/GLL.US.md) - [UGL.US](https://longbridge.com/en/quote/UGL.US.md) - [IAU.US](https://longbridge.com/en/quote/IAU.US.md) - [GLD.US](https://longbridge.com/en/quote/GLD.US.md) - [SGOL.US](https://longbridge.com/en/quote/SGOL.US.md) - [518850.CN](https://longbridge.com/en/quote/518850.CN.md) - [GOLD.AU](https://longbridge.com/en/quote/GOLD.AU.md) - [USDU.US](https://longbridge.com/en/quote/USDU.US.md) - [GLDI.US](https://longbridge.com/en/quote/GLDI.US.md) - [UUP.US](https://longbridge.com/en/quote/UUP.US.md) - [DULL.US](https://longbridge.com/en/quote/DULL.US.md) - [SHNY.US](https://longbridge.com/en/quote/SHNY.US.md) ## Related News & Research - [Why is your gold waiting on a speech?](https://longbridge.com/en/news/296733808.md) - [PRECIOUS-Gold holds steady with Fed minutes in focus](https://longbridge.com/en/news/296310600.md) - [PRECIOUS-Gold retreats as bond yields surge to highest levels in decades](https://longbridge.com/en/news/296241483.md) - [PRECIOUS-Gold drops after sharp gains as inflation concerns come to the fore](https://longbridge.com/en/news/296506502.md) - [GRAPHIC-Gold shows early signs of reclaiming safe-haven appeal after Iran war selloff](https://longbridge.com/en/news/296127032.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**