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Hedge Funds Hurry Back Into Gold, Silver Post-Fed Meeting - CFTC

(Kitco News) - Hedge funds were quick to jump back into their bullish gold and silver bets after the Federal Reserve left interest rates unchanged and lowered its long-term forecasts at its last meeting, according to the latest data from the Commodity Futures Trading Commission.

macro view of gold and silver bars. The latest CFTC Data shows Hedge Funds increased their bullish speculative bets in gold and silver last week.The latest trade data shows that bullish speculative interest in gold is back near its all-time-highs, after hitting their lowest point in three months.

The disaggregated Commitments of Trader report (COT), for the week ending Sept. 27, showed money managers increased their speculative gross long positions in Comex gold futures by 36,032, contracts to 282,151. At the same time, short bets fell by 5,998 contracts to 26,974. Gold’s net length now stands at 255,177 contracts. 

During the survey period, strong buying pressure helped to push gold prices up by almost 1%.

Ole Hansen, head of commodity strategy at Saxo Bank, noted that gold’s net-length jumped nearly 20% from the previous week.

However, he added that gold’s inability to push past initial support at $1,350 has caused some of hedge funds to take profits and establish new short positions as the market was unable to maintain long-term momentum after the FOMC meeting.

Bart Melek, head of commodity strategy at TD Securities, noted that the fact hedge funds quickly jumped back into the market showed that there is still interest in the yellow metal.

“They are seemingly keeping the faith that the next catalyst will be an awakening of volatility that will push prices higher, despite the current range bound lull ahead of the U.S. elections and the potential December Fed rate hike,” he said.

Phillip Streible, senior market analyst at RJO Futures, also sees more potential for the gold market, even if funds lighten up on their long positions in the near-term.

“As long as prices hold above $1,300, money managers will continue to hold onto their bullish bets. They don’t want to let them go and they will be quick to add to those positions because at this point anything can happen,” he said. “With so much uncertainty, I think there is more opportunities in gold and that will continue to attract funds.”

Hedge funds also jumped back into the silver market, albeit at a much slower pace compared to gold. The disaggregated COT report showed money-managed speculative gross long positions in Comex silver futures rose by 3,745 contracts to 97,185. At the same time, short positions fell by 1,826 contracts to 20,494. Silver’s net length now stands at 76,691 contracts.

The silver’s net length increased almost 8% from the previous week’s positioning.

Despite the renewed interest in silver, the price wasn’t able to hold onto gains. During the survey period, prices actually fell almost 1% after briefly pushing above $20 an ounce.

 

By Neils Christensen of Kitco News; nchristensen@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 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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