Money Managers Cut Back On Bearish Gold Positioning
(Kitco News) - Fund managers have started scaling back some of their extreme bearish positioning in gold futures, based on the most recent weekly data from the Commodity Futures Trading Commission.
However, these accounts added to their bearish stance in silver.
During the week-long period to Aug. 28 covered by the CFTC report, Comex December gold rose $14.40 to $1,214.40 an ounce, while December silver edged up 3.9 cents to $14.899.
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.
“According to the CFTC’s statistics, speculative financial investors squared some short positions in gold in the week to 28 August, thereby contributing to the price recovery in the interim,” said a research note from Commerzbank.
The CFTC’s most recent “disaggregated” report shows that money managers cut their net-short position to 75,772 futures contracts from 90,028 the week before. This occurred due to short covering, as the number of total shorts fell by 15,428 lots. This buying far outpaced the long liquidation, as gross longs declined by 1,172 contracts.
Factors behind this included the U.S. dollar index moving below 95, a strengthening Chinese yuan and Federal Reserve doubts that inflation is moving aggressively higher, said TD Securities.
Analysts said “the metal bouncing above $1,200 and a downward trend in short-term U.S. rates all imply that the market could see additional short covering and new long positioning. Any U.S. data weakness, U.S. dollar weakness or lack of risk appetite could prompt technicians to take gold higher as well.”
However, in silver, money managers continued selling and increased their net-short position to 35,705 lots, compared to 27,717 the week before.
“Speculative financial investors, therefore, remain the main component weighing on the silver price,” Commerzbank said.
Gross shorts rose by 5,208 contracts. There was also long liquidation, as total longs fell by 2,780.