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Hedge Funds Slowly Buying Gold, Silver

Kitco News

(Kitco News) - For the second week in a row, hedge funds waded slowly back into the gold and silver market, according to the latest trade data from the Commodity Futures Trading Commission.

The disaggregated Commitments of Traders report for the week ending Nov. 14 showed money managers increased their speculative gross long positions in Comex gold futures by 2,875 contracts to 190,657. At the same time, short bets declined by 2,511 contracts to 14,559. Gold’s net length increased to 176,098 contracts.

Commodity analysts at Commerzbank noted that gold’s net length is at a modest six-week high. The trade data included the price action from Nov. 10, as markets and traders were caught by surprise after 4 million ounces in future contracts were sold in a matter of minutes.

In a recent interview with Kitco News, George Milling-Stanley, head of gold investments at State Street Global Advisors, said that gold’s recent resilience is a sign that investors and fund managers are slowly accumulating gold, developing defensive positions as equity markets continue to look overvalued.

Ole Hansen, head of commodity strategy at Saxo Bank, said that gold benefited from safe-haven demand as uncertainty started to build around proposed U.S. tax reform legislation. While the House of Representatives passed a tax-reform bill last week, the Senate has just started to push its own version forward.

The renewed interest in gold last week was not enough to push prices out of its current range. During the survey period, gold prices rose 0.56%. The gold market has been stuck been stuck in a tight range since mid-September.

Many analysts note that gold will only be able to attract significant investor interest when prices push above the October highs at $1,306 an ounce.

Investor interest in silver also grew last week. The disaggregated report showed money-managed speculative gross long positions in Comex silver futures increased by 1,092 contracts to 78,464. At the same time, short positions fell by 1,342 contracts to 10,274. Silver’s net length now stands at 68,190 contracts.

Silver’s net length increased almost 4% from the previous week; however, prices only saw a modest rise of 0.79% during the survey period.

Commerzbank analysts noted that silver’s net length is at a nine-week high.

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 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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