Goldman Sachs' commodity department reported that it has reduced its risk in gold positions during the election on Tuesday, converting cash positions into options, "so we have the ability to buy gold at lower levels during the election, as we are concerned about position issues."

As said by the Goldman Sachs commodities department, it is no exaggeration to say, "Everyone we talk to is bullish on gold."

Therefore, as Goldman Sachs adjusts its gold trading, it wrote that in light of the upcoming election, the bank is now positioning itself with the following combination:

1. Use short-term leveraged structures to buy gold options, as we are happy to pay a premium to capture convexity in the event of a disputed outcome (2-month expiration gold options with a $3000 strike price are currently at a 12% premium over the $2753 spot gold).

2. Use 20% delta call option spreads with a 3-6 month expiration, as we still believe in the medium-term theory, and their spreads are larger.

Additionally, from a capital flow perspective, last Friday was the first time Goldman Sachs saw significant unwinding in the past month, and "the current difficulty with gold is that you can almost argue any election outcome in any way (except for a disputed election outcome, we don't see why prices wouldn't rebound)."

Goldman Sachs stated that if Harris wins: theoretically bearish, we are likely to see a knee-jerk decline, but it can also be said that once "bad news is priced in," there will be buying support at lower levels to uphold the medium-term bullish theory; if Trump wins: it is generally agreed that Trump's fiscal policy is bullish for gold, but whether this view is based on concentrated positions remains to be seen.

In summary, Goldman Sachs stated that it cannot be as simple as "I win, you lose," especially after gold has had great success this year—gold is the best-performing asset of 2024, so the bank "prefers to hold long positions through options, so we have the ammunition to buy gold when there is a significant adjustment in positions."

Article shared from: Jin Shi Data