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Fund Managers Boost Bullish Gold Positions In Latest CFTC Data

By Debbie Carlson of Kitco News
Monday August 18, 2014 11:50 AM

(Kitco News) - For the first time since July 22, large speculators added to their net-long gold futures and options holdings on the Comex division of the New York Mercantile Exchange in the latest Commodity Futures Trading Commission data for the week ended Aug.12.

The reversal in holdings came as gold prices rallied over $1,300 an ounce during that timeframe. Platinum group metals also saw large speculators add to bullish holdings. However, in silver, these traders trimmed net-long positions and cut their exposure in copper, too.

Metals prices were mostly higher during the time period covered by the latest CFTC report. Comex December gold rose $25.30 to $1,310.60 an ounce. September silver gained 7.20 cents to $19.833. October  platinum rallied $16.30 to $1,472.20 an ounce. September palladium rose $29.65 to $878. Comex September copper was the only metal to see prices fall, sliding 5 cents to $3.1545 a pound.

After cutting back on bullish positions in the last two reports, managed-money traders returned as buyers, lifting their gold net-long position close to where it was on July 22. Their net-long position sits at 133,708 contracts. These traders added 17,775 longs and cut 11,823 gross shorts. Producers’ and swap dealers’ net-short positions rose as they both cut gross longs and added gross short positions.

The non-commercial traders in the gold legacy report mirrored the disaggregated report’s money managers’ activity. They added 20,443 gross long contracts and sliced 11,644 gross shorts. They are now net-long 165,960 contracts, also the highest since July 22. Commercials are net-short and boosted that position by dropping gross longs and adding gross shorts.

Analysts at MKS (Switzerland) said the rise in the large speculators’ net-long position “somewhat explains the sell-off on Friday.”

Barclays said the rise in large speculators’ net-long position was the largest weekly increase since June. “Gross shorts are at their lowest since December 2012. This underscores the fragility of prices, in our view, given the absence of a sustained significant move higher amid rising geopolitical tensions and a lack of bearish interest in gold,” they said.  

Analysts at Standard Bank noted the traders’ net-long positions in both the legacy and disaggregated reports are also not far off the highs set this year, in March. However, they said there’s an important difference between then and now.

“Since March, aggregate open interest has been much lower and net speculative length as a percentage of open interest stands at a sizable 28.5%. This is up from 23.8% the previous week and well above the one-year and five-year average levels of 16.9% and 24.3% respectively. Relative to open interest, the market is overweight gold,” they said.

Managed-money accounts in silver trimmed their net-long positions on a combination of long liquidation and new shorts for the third straight week and this is the fourth week of position-reduction. They are net long 23,506 contracts, having cut 1,158 gross longs and added 4,402 gross shorts, pushing their net-long to the smallest since June 17. Producers decreased their net-short position and did so by adding more gross longs than shorts.  Swap dealers cut their net-short position by cutting more gross shorts than gross longs.

In the legacy report, non-commercials were flat on gross longs, having neither added nor subtracted positions, making the 3,478 gross shorts added the reason why their net-long position fell to 32,992 contracts. This is the smallest since June 24. Commercials are net-short and decreased that position by adding more gross longs than gross shorts.

Standard Bank analysts said the recent fall in speculative length in the past few weeks has helped to alleviate what they considered to be “a very long speculative market” a few weeks ago. “While we believe that there is room for further long liquidation, some of the downside risk from this section of the market has been removed. As a percentage of open interest, net speculative length currently stands at 16.1% versus (the) one-year average of 10% and five-year average of 15.9%,” they said.

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Managed-money accounts in platinum increased their net-long position to 39,080 contracts, following the action in gold, by adding 424 contracts of gross longs and cutting 819 gross shorts. Non-commercials in platinum raised their net-long position to 47,497 contracts in the legacy report, but did so by cutting 665 gross longs and 1,211 gross shorts.

Large speculators’ net-long palladium holdings rose in the disaggregated report to 18,158 contracts as they added 1,141 gross longs and cut 210 gross shorts. The palladium legacy report saw non-commercials add 609 gross longs and cut 542 gross shorts, raising their net-long to 22,136 contracts.

Managed-money accounts cut their net-long copper position to 19,096 contracts, cutting 14,401 gross longs and adding 832 gross shorts. Large speculators turned net-short in copper’s legacy report for the first time since July 1, pushing the net-short position to 1,503 contracts. They cut 14,934 gross longs and cut 5,992 gross shorts.

For further information, see the CFTC’s website.

By Debbie Carlson of Kitco News; 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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