More than one way to ride a bull - shift tactics in gold as liquidity crunch caps rally, says Tastylive’s Vecchio

Tastylive’s Christopher Vecchio argues gold’s inability to attract a safe-haven bid despite renewed Middle East turmoil is consistent with a “liquidity-driven phase” where investors prioritize cash—specifically USD liquidity—over traditional havens. He says this dynamic has capped upside and left gold “testing support near $5,000/oz” to start the week, but he maintains the broader bull trend is not over. Vecchio frames the initial-crisis playbook as broadly risk-off selling across assets (gold, Treasuries, equities) while the dollar holds firm because the market is seeking the world’s reserve currency rather than exiting US assets. He adds that structural pressures linked to supply chains and energy are building in the background—citing signs of tightening further out the oil curve and rallies in agriculture/fertilizer equities—yet these have not translated into sustained gold demand so far. For positioning, Vecchio recommends adapting tactics to a lower-momentum/sideways tape: instead of buying slightly out-of-the-money calls (high convexity but vulnerable to theta decay when gold chops), he highlights selling puts as a way to stay bullish via positive delta while potentially benefiting from time decay if spot remains range-bound. Near-term, he expects gold may continue to struggle for “strong upside momentum” until the liquidity impulse fades; catalysts to watch are any easing in funding stress/USD strength and clearer inflation/supply-shock pass-through from energy and supply-chain disruptions. Key risk to the view: if the liquidity phase persists or USD strength accelerates, gold could remain capped or retest lower levels even amid geopolitical escalation, delaying the typical “second phase” outperformance Vecchio references from past crises (GFC/COVID).