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Large Speculators Raise Gold Net Long To Highest Level Since February—CFTC Data

(Kitco News) - Speculators hiked their bullish positioning in gold futures to the highest level since February during the latest reporting week for the Commodity Futures Trading Commission, analysts report.

The bulk of a dramatic increase was fresh buying, although there was also continued buying to offset previous short, or bearish, positions.

The most recent positioning report is for the week through Oct. 20. During this time frame, Comex December gold rose $12.10 to $1,177.50 an ounce, while December silver tacked on a penny to $15.917.

Net long or short positioning in the CFTC data reflect the difference between the total number of bullish and bearish contracts. Traders monitor the data to gauge the general mood of speculators, although excessively high or low numbers are viewed by many as signs of overbought or oversold markets that may be ripe for price corrections.

The commission issues two reports each Friday -- a so-called “legacy” report and a “disaggregated” report, started in 2009 and meant to offer more detail.

In the disaggregated report, money managers upped their gold net-long position by 51% to 116,344 futures contracts from 77,213 week before. They added 27,849 longs, which reflects fresh buying, taking the total to 156,199. They cut total shorts by 11,282 to 39,855.

In the legacy report, the non-commercial accounts increased their net long to 151,301 futures contracts from 117,159 in the prior week.  They boosted gross longs by 29,928 to 233,227, while scaling back shorts by 4,214 to 81,926.

“As the CFTC’s statistics on the positioning of speculative market participants show, bets on rising prices of both gold and silver were increased considerably in the week to 20 October,” said a research note from Commerzbank. “Net-long positions in gold achieved their highest level since February, for example.”

Considering the sharp rises in bullish speculative positioning, however, Commerzbank described the gain in gold during the week-long reporting period as “disappointing.”

UBS, also commenting that speculative net length hit the highest level since February, also pointed out that the gold net-long still looks “lean” at 53% of the all-time high.

“However, that positioning has recently increased sizably over a relatively short span of time and gold prices are currently over $90 above the lows suggests that some fresh hesitation is perfectly
understandable here,” the bank said.

Barclays pointed out that total short positions have fallen to the lowest level since March, meaning short covering has contributed to a price rise in recent weeks. However, analysts added, this means also short covering is also unlikely to continue play a large role in price action.

In the case of silver, in the disaggregated report, money managers upped their net long to 47,902 futures contracts from 41,973 the week before. They hiked total longs by 4,493 lots to 60,905 and cut gross shorts by 1,436 to 13,003.

Non-commercials, meanwhile, boosted their net long in silver to 57,298 from 51,710. They added 4,874 longs for a total of 79,449, while cutting gross shorts by 714 to 22,151.

By Allen Sykora of Kitco News;



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