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Large Speculators Trim Bullish Platinum Trades; Gold Mixed - CFTC Data

By Debbie Carlson of Kitco News
Monday May 5, 2014 11:50 AM

(Kitco News) - For the second week, large speculators pulled back slightly on their bullish platinum futures and options positions on the Comex division of the New York Mercantile Exchange in the latest weekly commitments of traders report from the Commodity Futures Trading Commission, as signs of progress in South Africa labor talks were expected.

In palladium, however, these traders gave a modest boost to their bullish positions in both the agency’s disaggregated and legacy reports. Yet for gold and silver, large speculators’ activity was mixed between the two reports, with mostly minor position changing seen. In copper, fund activity was also mixed, with these traders turning net long in the disaggregated report. The data covers trade through April 29.

Precious metals prices fell, while copper prices rose during the timeframe measured by the report. Comex June gold gained $15.20 to $1,296.30 an ounce. July silver rose 15 cents to $19.538. June palladium rose $24.25 to $807.90. Nymex July platinum fell $31.10 to $1,431.40. Comex July copper gained 3.90 cents to $3.0730 a pound.

For the second straight week, managed-money accounts in platinum cut their net-long position, which now stands at 29,115 contracts. Gross longs were zero, but they added 762 shorts. Non-commercials in platinum also reduced their net-long position in the legacy report for the second week, to 41,146 contracts, having cut 40 gross longs and 1,430 gross shorts.

“Platinum specs (speculators) appear to have ignored the upward price trend and are likely betting that a (South) Africa wage deal is closer than it appears,” said TD Securities.

Large speculators’ net-long palladium holdings rose modestly in the disaggregated report to 22,042 contracts. They added 593 gross longs and cut 151 gross shorts. The palladium legacy report saw non-commercials add 954 gross longs and cut 102 gross shorts, lifting their net-long to 25,236 contracts.

Also for the second consecutive week, fund action in the CFTC’s two gold reports was mixed, but this week there was slight drop in the large speculators’ net-long position in the disaggregated reading. Managed-money traders cut their net-long position by only 618 contracts, to 89,954 contracts. Although the reduction was small, it was enough to push their net-long position to the lowest since Feb. 11.

The drop came as these traders added 1,461 gross longs and 2,079 gross shorts, with new bearish positions overwhelming new bullish ones. Producers’ net-short position rose as they cut gross longs positions and added gross shorts. Swap dealers also saw their net-short position rise as they added more shorts than longs.

MKS (Switzerland) said the action in gold was “fairly neutral positioning,” although they noted more activity occurred in the exchange-traded fund arena. In the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, holdings fell 2.70 metric tons to 782.85 tons on Friday, the third straight session of losses. “Last week alone, the fund saw nearly 10 tons in outflows after being fairly stable the previous week,” they said.

In the gold legacy report, non-commercials boosted their net-long position, reversing some of the previous report’s reduction. They added 2,368 gross longs contracts and added 931 gross shorts. They are now net-long 112,095 contracts. Commercials are net-short and raised that position by cutting gross longs and adding gross shorts.

Analysts at Citi Research said continued geopolitical concerns between Russia and Ukraine, along with a weaker U.S. dollar, “have buttressed bullion trading levels, albeit levels have been stuck in a narrow $40 (troy ounce) band between $1,285-1325/t oz. for several weeks.”

Analysts at Bank of America Merrill Lynch said during the time frame measured, price action in gold is bearish. “While the consolidation from $1,277 (the April 1 low) is greater than anticipated, the trend remains lower for $1,215 to $1,187. Sustained break of $1,331 says we are wrong,” they said.

As with the gold data, large speculators’ moves in silver were split between the two reports. Managed-money accounts returned to trimming their net-long position in silver, dropping their holdings to 1,862 contracts. They added 1,017 gross longs and 1,775 gross shorts. Producers increased their net-short position when they cut more gross longs than gross shorts, but ultimately cut exposure. Swap dealers decreased their net-long position by cutting gross longs and adding gross shorts.

For the second week non-commercials lightly built up their net-long position in the silver legacy report, pushing it to 9,566 contracts by adding 2,380 gross longs and 2,182 gross shorts.  Commercials are net-short and lifted that position, but did so by cutting more gross longs than gross shorts.

“Silver specs followed gold, but shorts continued to place big bets that the devil's metal would fall to lows,” TDS said.

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As was the case in gold and silver, funds’ activity in the two copper reports were mixed. In the disaggregated report, managed-money accounts turned net-long for the first time since Feb. 25 by adding 1,974 gross longs and cutting 6,621 gross shorts, pushing the net-long total to 5,067 contracts. In the legacy report, funds reduced their net-short position for the second week. They are net-short 13,726 contracts of copper, having added 1,399 gross longs and cut 4,749 gross shorts.

“With both China’s official PMI (purchasing managers index) and the HSBC China PMI survey for the last month beating market expectations, optimism over the price outlook for copper has picked up significantly up through the end of April,” said analysts at Citi Research.

However, they added, prices struggled after the reporting window closed, so they “expect the bullish sentiment in terms of money manager net long to have eased by the next COT report.”

For further information, see the CFTC’s website.

By Debbie Carlson dcarlson@kitco.com
Follow me on Twitter @dcarlsonkitco



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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