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(Kitco News) - Speculators continued to limit their exposure to most metals as prices for gold, silver and platinum continued to fall as the last week of 2011 began.

They cut net-long positions in gold and silver and net-short positions in copper as seen in both the legacy and disaggregated weekly commitment of traders reports released by the U.S. Commodity Futures Trading Commission for the week ended Dec. 27. Activity was mixed in platinum, but palladium saw a rise in net-long positions in both reports.

During the timeframe measured, the most-active February gold futures contract on Comex lost $22.10 an ounce and settled at $1,595.50 on Dec. 27. Comex March silver fell 79.6 cents an ounce to settle at $28.740. April Nymex platinum dropped $1.90 an ounce to settle at $1,437.90 and March Nymex palladium rose $38 an ounce to settle at $666.60. Comex March copper rose 3.95 cents a pound to $3.4090.

Managed money accounts trimmed their net-long position in gold, cutting 4,094 gross longs and adding 1,138 gross shorts, lowering the net-long position to 111,919 contracts.

Producers lowered their net short position by cutting more shorts than longs. Swap dealers increased their net-short position by adding more gross shorts than longs.

Non-commercials in the legacy report cut 5,777 gross longs and 779 gross shorts, lowering the net-long position to 135,907 contracts. Commercials snipped both gross longs and gross shorts, decreasing their net-short position because they cut more shorts.

TD Securities said as gold speculators continue to close their net-long position, the move has pushed the total to levels last seen at the start of 2009. “Open interest also continued to new lows on the year,” they said.

Speculators slightly decreased their net-long position in silver in the disaggregated report. They removed 353 gross longs and added 650 gross shorts, cutting the net long to 6,200 contracts. Producers lowered their net-short position by cutting more gross shorts than longs and swap dealers raised their net-long position by adding more gross longs than shorts.

In the legacy report there was little action for silver. The non-commercial traders cut three gross long contracts and added 580 gross shorts, reducing the net-long position to 11,028 contracts. Commercials decreased their net short by adding gross longs and trimming gross shorts.

Funds cut their net-long position in the platinum group metals. In platinum they added more gross shorts than longs, dropping the net-long position for managed-money accounts to 11,379 contracts. Non-commercials in the legacy data mimicked the overall action in the disaggregated report, slicing gross longs and raising gross shorts, lowering the net-long position to 18,828 contracts.

Only in palladium did speculators buck the trend of reducing exposure to the metal. Managed-money increased their net-long positions in palladium by adding gross longs and cutting shorts. This raised the net-long to 5,212 contracts. In the legacy report, the non-commercials also added gross longs and cut gross shorts, lifting the net-long position to 6,031 contracts.

Speculators remain net short in copper for both the disaggregated and the legacy report, but saw the net-short position drop. In the disaggregated report, managed-money accounts are now net short 4,018 contracts. In the legacy report, the non-commercial trader is net short 3,608 contracts.

Despite the reduction in shorts, TD Securities said the copper net-short position is more in fluctuation than a sign of new direction.

Commerzbank pointed out that speculative traders “have been betting on falling copper prices overall for 15 straight weeks. High levels of pessimism among financial investors have always been a good contrary indicator in the past: even a slight improvement in the market situation and sentiment can spark a sharp price rise in such a situation.”

For a more detailed breakdown, please visit the CFTC website: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm

By Debbie Carlson of Kitco News dcarlson@kitco.com

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