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Speculators Return To Gold, But Activity Mixed Elsewhere in Precious Metals – CFTC

By Debbie Carlson Kitco News
Monday September 30, 2013 11:45 PM

(Kitco News) - Speculators returned to buy gold futures and options traded on the Comex division of the New York Mercantile Exchange, but their activity in other precious metals markets was mixed, according to U.S. government data.

For the week ended Sept. 24, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report continued to not only cover previously sold positions, but also established new bullish trades in gold in both the disaggregated and legacy versions of the report. Analysts said this may have reflected the Federal Reserve’s decision not to taper its quantitative easing program.

In other precious metals markets, speculators cut back on their silver exposure as seen in both reports. They added to their palladium position, but saw mixed action in platinum. In copper, managed-money accounts in the disaggregated report turned net-long, but they stayed net-short in the legacy report.

Metals prices were mixed during the week covered by the report. December Comex gold rose $6.90 an ounce to $1,316.30 as of Sept. 24, while December silver slid 19.8 cents to $21.586. Nymex October platinum dropped $3.60 to $1,418.80. December palladium rose $13.05 to $720. Comex December copper rose 3.35 cents to $3.2565 a pound.

Managed-money accounts boosted exposure to gold futures and options in the disaggregated report, increasing their net-long position to 78,654 contracts. Managed-money accounts added 1,953 gross longs and cut 6,588 gross shorts. Producers and swap dealers both lightly added to their net-short position by cutting more gross longs than gross shorts.

The situation was similar in the legacy report as non-commercials sharply increased their net-long position, having added 987 gross longs and cut 7,018 gross shorts. They are now net-long 99,949 contracts. Commercials are net-short, having cut many more gross longs than gross shorts.

Barclays said the action in gold shouldn’t have come as a surprise since this report includes the market’s reaction to the Fed’s decision to keep its QE program. Gold prices rallied sharply after the news came out, and much of it was determined to be market participants covering shorts.

Barclays also noted prior to the new long positions being added in this report, the speculative long positioning was at its lowest since December 2008, a record low. Although longs rose for the first time in over a month, “the relatively modest increase in gross longs reflects a lack of strong conviction in gold,” they said.

TD Securities said the action in gold suggested that speculators “are not as convinced of near-term downside, with specs (speculators) covering short bets, but the small increase in length also shows caution to the upside – prices likely to oscillate within a $1,300-1,415/oz range.”

The silver net-long position for the managed-money accounts fell to 12,198 contracts. The drop came from cutting 888 gross longs and adding 907 gross shorts. Producers are net-short but saw that position fall when they added more gross longs than gross shorts. Swap dealers are net-long and added to that position by adding gross long and cutting gross shorts.

Non-commercial silver activity was similar in the legacy report. They cut 1,400 gross longs and added nine gross shorts, lowering their net-long to 18,621 contracts. Commercials are net-short, but reduced that position by adding more gross longs than gross shorts.

The drop in the net-long position for speculators in silver reflected that these traders “are more convinced that the risks are tilted in favor of the downside with longs covering positions and shorts staying flat,” TDS said.

Managed-money accounts in platinum slightly decreased their net-long position to 29,102 contracts, having added 285 gross longs and 341 gross shorts.  On the other hand, non-commercials slightly increased their net-long position, which now is 35,463 contracts, having added 709 gross longs and 603 gross shorts.

In palladium, the managed-money accounts raised their net-long position to 22,042 contracts. They added 180 gross longs and cut 621 gross shorts to increase the net-long position. In the legacy report, non-commercials added 458 gross longs and cut 836 gross shorts, lifting their net-long to 23,649 contracts.

In copper, managed-money accounts switched to being net-long again after being net-short the previous week. They are now net-long 5,284 contracts, having added 2,140 gross longs and cut 6,951 gross shorts. In the legacy report, funds remained net-short, but reduced that position. They added 987 gross longs and cut 7,018 gross shorts, lowering their net-short position 7,255 contracts.  

Commmerzbank attributed the managed-money accounts’ move to a small net-long position in the disaggregated report to the “Fed continuing its bond purchases for the time being.”

TDS said the improved economic data out of China not only convinced copper shorts to cover positions, but to also add a few long positions. 

For further information, see the CFTC’s website: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm

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By Debbie Carlson of Kitco News; dcarlson@kitco.com

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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