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Gold Price Bottom: Analysts See Signs That Selling Pressure Is Weakening

Kitco News

(Kitco News) - Is the bottom in for gold? That is the question commodity analysts are asking themselves after the latest Commodity Futures Trading Commission data show a modest change in the yellow metal’s net-short speculative positioning, despite prices falling to a 12-month low during the survey period.

The CFTC's disaggregated Commitments of Traders report for the week ending July 3 showed money managers increased their speculative gross long positions in Comex gold futures by 9,430 contracts to 104,275. At the same time, short bets rose by 10,660 contracts to 105,529. Gold's net short positioning currently stands at 1,254 contracts, the biggest net short since 2015.

“Speculative financial investors remained pessimistic in the week to 3 July, though the increase in net-short positions in gold was not as pronounced as one might have assumed given the price slide,” said commodity analysts at Commerzbank.

In a recent interview with Kitco News, Ronald-Peter Stoeferle, fund manager at asset-management firm Incrementum AG and author of the annual In Gold We Trust report, said that he is confident that gold has put in a low for the year. He added that because of current speculative positioning, it will be difficult for negatively in the gold space to grow.

Commodity analysts at TD Securities said that gold has struggled because of growing weakness in emerging-market currencies, plus diverging central-bank monetary policy, which are two critical factors that have pushed the U.S. dollar its highest level in a year. However, the analysts see the potential for gold to rally in the second half of the year.

“Gold seems to have found a bottom just as Chinese officials cooled worries of the yuan being weaponized,” the analysts said.

In a separate report released Monday, TDS said that it sees gold prices rising to $1,300 an ounce by the end of the fourth quarter.

Bill Baruch, president of Blue Line Futures, said his firm remains bullish on gold as the market continues its bottoming process.

“We maintain that there is tremendous value in gold at this area,” he said.

While optimism is growing in the gold market, silver continues to struggle after it was hit with a new wave of short selling.

The disaggregated report showed money-managed speculative gross long positions in Comex silver futures fell by 2,010 contracts to 72,263. At the same time, short positions rose by 10,030 contracts to 62,242. The wave of selling pressure cut silver’s net length nearly in half, currently standing at 10,021 contracts.

During the survey period, September silver futures dropped to their lowest level since mid-December as prices fell below critical psychological support at $16 an ounce.

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.