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Hedge Funds Buy Gold For First Time In Nine Weeks

(Kitco News) - After eight weeks of declining interest in gold, hedge funds started wading back into the gold market, according to the latest trade data from the Commodity Futures Trading Commission.

The Disaggregated Commitments of Traders report, for the week ending Jan. 10, showed money managers increased their speculative gross long positions in Comex gold futures by 7,777 contracts to 135,563. At the same time, short bets fell by 11,345 contracts to 79,884. Gold’s net length now stands at 55,679 contracts.

Gold’s net length bounced off its lowest level in almost a year, increasing 52% from the previous week. However, some analysts noted that long interest in gold is still at depressed levels and most of the increase was due to short-covering. . Gold’s net length is down almost 80% from its record highs seen in early July. During the survey period, gold prices rallied 2.2% to their highest point in nearly a month.

“Following an extended period of declining net long positions, investors increased their long gold exposure and covered shorts as it became increasingly likely that President-elect Trump may not be able to push all of his growth agenda through Congress. This, along with a dropping USD and unimpressive data lifted prices and prompted traders to reduce their interest rate expectations,” said Bart Melek, head of commodity strategy at TD Securities.

In a recent report, Ole Hansen, head of commodity strategy at Saxo Bank, said that short-covering could continue to help improve gold’s speculative interest in the short term. He added that prices need to push above $1,200 an ounce to attract long-term interest.

Along with gold, the silver market is also attracting some renewed investor interest. The disaggregated report showed money-managed speculative gross long positions in Comex silver futures rose by 2,995 contracts to 64,671. At the same time, short positions fell by 1,446 contracts to 17,897. Silver’s net length now stands at 46,774 contracts.

This is the second consecutive week silver’s net length has grown, increasing 10% from the previous week. However, silver’s net length is down more than 51% from its record highs.

During the survey, March silver futures rose 3% with prices hitting their highest levels since late December.

 

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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