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Money Managers Scale Back Gold, Silver Bullish Positioning - CFTC

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(Kitco News) - Large speculators scaled back their bullish positioning in gold and silver futures during the most recent reporting period for data compiled by the Commodity Futures Trading Commission.

Both metals managed to rise anyway during the reporting period, which covered the week through March 12.

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 most recent “disaggregated” report showed that money managers cut their net-long position to 17,407 contracts in gold futures as of March 12, down from 31,247 the prior week. The biggest chunk of the decline was fresh selling, as gross shorts rose by 11,230 lots. There was also some long liquidation, as the number of total longs fell by 2,610 contracts.

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TD Securities commented that with the market already pricing in a dovish Federal Open Market Committee at its meeting this week, the anticipated downward shift in the so-called dot-plot – which shows the expectations of individual policymakers – likely will be not enough to generate a rally for the yellow metal. This prompted shorts to bet on downside, in case the Fed is not as dovish as anticipated, TDS said.

“But, we believe any weakness would be short-lived and see new bids in the cards for gold as the global growth environment remains questionable, with central banks reluctant to hike,” TDS added.

Commerzbank analysts pointed out that the gold net-long was a seven-week low.

“However, the gold price has not fallen any further of late and has stabilized at around the $1,300 mark,” the bank says. “The headwind from speculative financial investors has abated, in other words.”

The situation is comparable for silver, Commerzbank continues. Money managers’ net long fell to 9,487 lots in silver futures from 17,856 the week before. As was the case in gold, the majority of the move was fresh selling, as gross shorts rose by 4,715 lots. Also, bulls exited from 3,654 long positions.

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