Gold Surges Back After Nearly $20 Billion Sell-Off; Tether Becomes One of the World's Largest Physical Buyers
nashnova research
Gold staged a violent short-squeeze after $19.5 billion in speculative selling over five weeks, while Tether has quietly amassed 146.5 tonnes of physical gold — a crypto issuer is now reshaping who buys bullion.
$19.5 billion in selling — who dumped and how?
Goldman Sachs data shows five straight weeks of speculative selling totaling $19.5 billion. The final week alone saw $8 billion in sales — $5.2 billion in long liquidation and $2.8 billion in fresh shorts.
Roughly 95% of the selling came from "other and non-reportable" traders. This means → the dump was driven not by major institutions but by smaller funds and retail in a collective stampede.
Once the selling exhausted itself, gold snapped into a violent short squeeze — forced short-covering pushed prices sharply higher.
What did the options market smell before the bounce?
Goldman analyst Quinn noted that three-month implied volatility — a gauge of how scared the market is — kept climbing in the days before the rebound.
The normalized 25-delta put/call skew — the extra premium traders pay for downside protection — hit the 85th percentile over the past year. In plain terms = nearly everyone was buying insurance against a crash; fear was at an extreme.
Days later, gold began surging. This reflects a classic contrarian signal: when every participant is positioned for further decline, the selling energy is already spent.
CTA short-covering — how much fuel is left?
Commodity trading advisors (CTAs) — algorithm-driven trend-following funds — held sizable gold shorts heading into the squeeze.
Some of those shorts have already been forced to cover, adding to the rally. This means → the rebound is powered partly by genuine new buying and partly by bears capitulating.
Goldman says the remaining room for short-covering will determine whether this rally can sustain. Put simply = if most shorts have already covered, further upside needs fresh longs to take the baton.
Oil, the dollar, China — how do three macro forces converge on gold?
Goldman analyst Privorotsky argues gold may have become an "inverse oil trade." Emerging-market central banks have been accumulating gold for years, but high oil prices strained their energy bills, forcing some to pause purchases.
As oil falls, that budget pressure eases and central-bank buying resumes. A weaker dollar simultaneously makes dollar-priced gold cheaper for non-US buyers.
Chinese traders are visibly buying gold and selling copper. Goldman reads this as concern over the AI investment cycle's outlook, not a broader equity de-risking. In plain terms = money is flowing from copper (a proxy for industrial and AI-infrastructure demand) into gold (a haven), suggesting some players are betting the AI boom may cool.
Tether holds 146 tonnes of gold — what does that mean?
Société Générale data reveals that Tether — the stablecoin issuer — has quietly become one of the world's largest physical gold buyers since 2023, holding 146.5 tonnes as of June, on par with Libya's sovereign reserves and exceeding the Philippines.
SocGen estimates holdings may have risen to 161 tonnes by September, equivalent to the world's seventh-largest gold ETF. Annualized growth since early 2023 runs at 31%, far above ETFs at 13.6% and central banks at 1.8%.
Cumulative net purchases of 87.5 tonnes place Tether in the global top five, behind only three central banks and one ETF. This signals that an institutional-scale buyer from crypto has established itself in the physical gold market — the buyer base is being quietly reshaped.
What does the chart say — can the rally last?
Gold has reclaimed its short-term trendline dating from late August, but a more durable bullish setup requires retaking the 50-day moving average (around $4,205).
The 200-day moving average sits below $4,500, still a considerable distance from current prices. This means → the short-term bounce is confirmed, but the medium-term trend has not yet flipped bullish.
Goldman warns the "buy gold, sell copper" trade is growing increasingly crowded and faces reversal risk. The dollar index (DXY) is the key variable to watch for whether this leg higher can extend.
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