Money Managers Increase Bullish Positioning In Gold Futures
(Kitco News) - Large speculators increased their net bullish positioning in gold futures and moved into a small net-long position for silver during the most recent reporting week for data compiled by the Commodity Futures Trading Commission.
During the week-long period to May 29 covered by the report, Comex August gold rose $6.70 to $1,304.10 an ounce, while July silver lost 20.2 cents to $16.373.
Net long or short positioning in the CFTC data reflect the difference between the total number of bullish (long) and bearish (short) 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 CFTC’s “disaggregated” report showed that money managers upped their net long in gold futures to 54,001 contracts from 16,531 the week before. This occurred on a combination of fresh buying, as reflected by a 16,471 increase in gross longs, plus short covering, as indicated by a decline of 20,999 total shorts.
“Speculators aggressively added to their longs in gold and likely took profits on their shorts as the Italian crisis and deteriorating trade relations convinced money managers to seek safe-haven assets,” said a research note from TD Securities.
Sean Lusk, director of commercial hedging with Walsh Trading, said in an interview with Kitco News that the market was helped by the political uncertainty in Europe and ongoing geopolitical issues, with buying also picking up again as gold prices approached a key technical-chart support area.
He commented that some buying in the form of bargain hunting set in after the price pullback.
“We had some fund withdrawals. Now, they’re putting them [bullish positions] on again,” Lusk said, adding that gold has shown some signs of stabilizing.
TD Securities said gold could “underwhelm” this week as recent positive U.S. economic data and higher oil prices mean potential increases in U.S. interest rates.
“A solid nonfarm report will likely see the yellow metal trade lower towards $1,280/oz, but we expect the impact on rate expectations to be muted, which should prevent any rout,” TDS said.
Meanwhile, in silver futures, the market flipped to a small net-long position of 791 contracts from a small net short of 590 the week before. Buying by money managers outpaced the selling, as total long positions rose by 3,611 contracts and total shorts climbed by 2,230.