Gold Market Resilient As Net-Bullish Positioning Drops 62% - Analysts
The gold market once again has a relatively timely snapshot of speculative positioning within the futures market after the Commodities Futures Trading Commission released the entire backlog of trading data that had resulted from the government shutdown in late December and much of January.
The up-to-date CFTC disaggregated Commitments of Traders report, for the week ending March 5, showed that money managers reduced their speculative gross long position in Comex gold futures by 28,314 contracts to 125,903. At the same time, short bets rose by 18,998 contracts to 94,656. Gold’s net length currently stands at 31,247 contracts.
Commodity analysts at Commerzbank noted that gold’s net length declined by 62% from the previous week. However, despite the strong selling pressure, some analysts pointed out that the yellow metal was able to hold critical support levels above $1,280 an ounce.
“Data thru Tues. shows just 88K net long futures contracts at Large Specs (relatively low). Coupled with 57 tons outflows from GLD since end of Jan. (7%) & DXY at 97.4 -- pretty amazing gold's at $1300,” said Fred Hickey, creator of the investment newsletter The High-Tech Strategist, in a twitter post.
Commodity analysts at TD Securities said that some of the selling pressure was due less dovish rhetoric from the Federal Reserve. In his recent semiannual testimony before Congress, Federal Reserve Chairman Jerome Powell struck a reasonably upbeat tone, saying that he still sees positive growth for the U.S. economy in 2019.
However, analysts at TD added that they are optimistic that it’s only a matter of time before gold prices push back above $1,300.
“As the year unfolds and the global growth environment remains questionable, with central banks reluctant to hike, net length should again jump higher,” the analysts said.
Similar to the gold market, silver also saw investors decrease their long positions and increase their short bets.
The disaggregated report showed money-managed speculative gross long positions in Comex silver futures fell by 17,762 contracts to 54,915. At the same time, short positions rose by 12,144 contracts to 37,059. Silver’s net length now stands at 17,856 contracts down more than 62% from the previous week.
Despite the intense selling pressure, silver prices managed to hold critical support above $15 an ounce.