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Large Speculators Raise Silver Net-Long Positions; Gold Activity Mixed - CFTC Data

By Debbie Carlson of Kitco News
Monday April 28, 2014 12:05 PM

(Kitco News) - Large speculators bolstered their net-long silver 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, reversing recent reductions.

These traders’ activity in gold was mixed, however, as they modestly increased net-long positions in the agency’s disaggregated report, but continued to cut exposure in the legacy data. Platinum group metals positioning was mixed, but large speculators decreased their copper net-short positions. The data covers trade through April 22.

Precious metals prices fell, while copper prices rose during the timeframe measured by the report. Comex June gold fell $19.20 to $1,281.10 an ounce. May silver slid 12.80 cents to $19.361. June palladium dropped $12.25 to $783.65. Nymex July platinum fell $44.30 to $1,400.30. Comex May copper gained 6.60 cents to $3.0535 a pound.

Action in the CFTC’s two gold reports was mixed, with a modest gain for large speculators’ net-long position in the disaggregated reading. Managed-money traders boosted their net-long position by a mere 435 contracts to 90,572 contracts.

The increase came as these traders cut 736 gross longs and 1,170 gross shorts, reducing exposure overall. Producers’ net-short position fell as they added more gross longs positions than gross shorts. Swap dealers also saw their net-short position fall as they added more longs than shorts.

In the gold legacy report, non-commercials reduced their net-long position with a reduction in gross longs and little change in gross shorts. They cut gross longs 2,882 contracts and added 17 gross shorts. They are now net-long 110,658 contracts, which is still the smallest net-long position since Feb. 11. Commercials are net-short and reduced that position by adding more gross longs than gross shorts for the third week.

UBS said regarding the legacy report that since posting a 2014 high on March 18, non-commercial exposure is more “manageable.”

The bank also said in the past several weeks since funds have cut their net-long position, “gross longs have fallen at double the rate that gross shorts have increased. Despite the weak sentiment … gold continues to trade above $1,300. That marks a successful turnaround, considering that physical demand remains poor and a strong argument for holding gold in the very short-term is absent. A decent element in the climb back to $1,300 was short covering, rather than fresh longs. Nonetheless, gold must command some respect that it successfully overcame its threats and closed the week higher.”

After cutting net-long positions for seven weeks straight, managed-money accounts reversed the trend and raised their net-long silver holdings to 2,620 contracts. They added 204 gross longs and cut 771 gross shorts. Producers reduced their net-short position again when they cut more gross shorts than gross longs. Swap dealers increased their net-long position by cutting more gross shorts than gross longs, but ultimately cutting exposure.

In the silver legacy report, non-commercials lightly built up their net-long position to 9,368 contracts but did so by cutting 1,136 gross shorts and 1,038 gross longs.  Commercials are net-short and reduced that position by cutting more gross shorts than gross longs.

“Silver specs (speculators) removed positions from both sides as longs followed gold prices, while shorts got a little uncomfortable with their heavy positioning, particularly as year-long lows approach,” said TD Securities.

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Managed-money accounts in platinum cut their net-long position to 29,877 contracts as they cut 3,079 gross longs and cut 53 shorts. Non-commercials in platinum also reduced their net-long position in the legacy report, to 42,616 contracts, having cut 3,452 gross longs and 1,101 gross shorts.

“PGMs saw specs (speculators) exit from both longs and shorts, with those long in the platinum space closing out a hefty (number of) … lots on the back of hope that the latest South African producer wage offering would end the strikes—that appears unlikely to be the case once again,” said TDS.

UBS said while platinum net-long positions fell, “spec length remains very extended and is a risk for the metal over the coming weeks, as the South African strike situation unfolds.”

Large speculators’ net-long palladium holdings rose modestly in the disaggregated report. Here the managed-money accounts lifted their net-long position to 21,298 contracts by adding 93 gross longs and cutting 184 gross shorts. The palladium legacy report saw non-commercials cut 467 gross longs and cut 286 gross shorts, trimming their net-long to 24,180 contracts.

Funds sharply reduced their net-short positions in copper, with it particularly noticeable in the disaggregated report. Here the managed-money accounts cut their net-short position by 76%, to 3,527 contracts. They added 3,002 gross longs and cut 8,363 gross shorts. In the legacy report, funds also reduced their net-short position, but not as severely. They are net-short 19,875 contracts of copper, having cut 2,472 gross longs and cut 3,993 gross shorts.

“Copper saw a change in fortune as net spec approached parity due to predominantly short covering. The LME (London Metal Exchange three-month) price has been trending higher lately, despite the minor hiccup on April 15 relating weaker-than-expected M2 money supply data from China. Further strong momentum could see further short covering towards median levels,” said analysts at Standard Chartered.

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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