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CFTC Data Show Large Speculators Bullish Gold Holdings Slip, Turn Bearish Silver

By Debbie Carlson of Kitco News
Monday November 3, 2014 1:07 AM

(Kitco News) - Large speculators’ recent buildup in bullish Comex gold futures and options holdings was short-lived as these traders trimmed some of their newly added longs in the latest Commodity Futures Trading Commission weekly data.

In the past two weekly reports, these traders aggressively added to net-long positioning in both the disaggregated and legacy reports, nearly doubling their holdings. However, for the week ended Oct. 28, the large speculators whittled down these net-long positions slightly as prices fell. Further, analysts pointed out, the data collection ended just before gold prices took their tumble last week, so the current report doesn’t reflect what these commodity funds did when prices washed out.

“We expect a sharp retrenchment in fund positioning to be reflected in the next COT (commitments of traders) release through both a liquidation of gross longs and addition of fresh short trades as funds and banks actively bought short-dated puts during month-end,” said analysts at Citi Research, specifically about gold positioning.

For the first time since June 3, large speculative traders are net-short silver in both reports. In the platinum group metals, these traders saw mixed activity, while in copper, funds sliced their net-short position.

Metals prices were mostly weaker during the time period covered by the latest CFTC report. Comex December gold lost $22.30 to $1,229.40 an ounce. December silver lost 32.30 cents to $17.226. January  platinum fell $15.70 to $1,266.30 an ounce. Bucking the weaker trend, December palladium rose $17.35 to $793.35. Comex December copper gained 6.5 cents to $3.093 a pound.

Managed-money traders cut exposure to gold on both sides of the market, cutting 5,338 gross longs and 364 gross shorts, lowering their net-long position to 70,298 contracts. Producers’ net-short position rose as they cut more gross longs than gross shorts, while swap dealers’ net-short position fell when they added gross longs and cut gross short positions.

The non-commercial traders in the gold legacy report also cut gross longs and gross shorts to lower their net-long position. They cut 7,883 gross long contracts and cut 1,126 gross shorts. They are now net-long 104,521 contracts. Commercials are net-short and reduced that position by cutting many more gross shorts than gross longs.

Bart Melek, head of commodity strategy at TD Securities, said the positioning reflects how speculators started to reduce their long position “after Fed (Federal Reserve) dovish enthusiasm waned after U.S. data exhibits more economic strength than expected.”

Barclays’ analysts noted gross long positioning in gold hovers around July highs and also said the recent downdraft in prices likely added pressure on any weak longs, which increases downside risk.

Managed-money traders boosted their net-short in silver, pushing it to the highest level since June 3. Their bearish position now stands at 10,321 contracts. The large speculators cut 251 gross longs and added 1,434 gross shorts. Producers slightly increased their net-short position, but did so by cutting more gross longs than gross shorts.  Swap dealers increased their net-long position by adding gross longs and cutting gross shorts.

For the first time since June 3, funds turned net-short in silver, as non-commercials added 135 gross longs and 1,638 gross shorts, making them net-short 98 contracts. This is the first time since June 3 that speculators are net-short silver in both reports. Commercials are also net-short but decreased that position by adding gross longs and cutting gross shorts.

Melek said silver speculators followed gold, but he cautions market participants that “the real fireworks could come from option ’spreading’ positions near record levels, suggests specs may eventually be forced to cover the wrong side of a bearish vol (volatility) play.”

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Managed-money accounts in platinum modestly decreased their net-long position for the second week, to 13,148 contracts by cutting 1,222 gross longs and adding 554 gross shorts. Non-commercials in platinum also slightly lowered their net-long position for the second week, to 21,509 contracts in the legacy report, by cutting 652 gross longs and adding 891 gross shorts.

UBS said speculators have weighed on platinum since mid-July, as “platinum longs have declined by a total of 1,565.75koz. The decline in platinum positioning in the last couple of weeks has been driven by shorts adding to positions. At the moment, platinum gross shorts are sitting at the year's high of 1,117.00koz which represents 86% of the record.”

Bucking the trend, large speculators’ net-long palladium holdings rose in the disaggregated report, to 18,237 contracts. They added 154 gross longs and cut 108 gross shorts. The palladium legacy report saw non-commercials add 187 gross longs and cut 113 gross shorts, raising their net-long to 22,224 contracts.

Managed-money accounts flipped back to reducing their copper net-short positions following last week’s build. Their net-short position fell sharply, to 1,246 contracts, as they added 3,032 gross longs and cut 7,665 gross shorts. Large speculators in copper’s legacy report only slightly cut their net-short position, reducing it to 21,414 contracts. These traders cut 43 gross longs and cut 6,481 gross shorts.

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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