Make Kitco Your Homepage

Money Managers Trim Bullish Positioning In Gold

Kitco News

(Kitco News) - Fund managers trimmed their net-bullish positioning in gold modestly during the most recent reporting week for positioning data compiled by the Commodity Futures Trading Commission.

During the week-long period to July 9 covered by the data, Comex August gold fell $7.50 to $1,400.50 an ounce, while September silver lost 9.1 cents to $15.147.

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 disaggregated report shows that money managers reduced their net long to 182,611 futures contracts from 194,087 the week before. This was due to a combination of long liquidation (gross longs fell by 5,885 lots) and fresh selling (total shorts rose by 5,591).

“Despite of the fact that the Fed has been signaling rate cuts in the not-too-distant future, specs have aggressively reduced their gold length,” said TD Securities. “Investors liquidated long exposure and increased their short positioning as gold slumped below the $1,400 mark. The price trended lower following a stronger-than-expected U.S. payrolls print, which prompted many in the market to believe the U.S. central bank would be less likely to move towards an aggressive dovish stance and saw the USD [U.S. dollar] move higher.”

In particular, gold fell sharply on July 5, the day the government reported that nonfarm payrolls rose by 224,000 during June.

Commerzbank said much of the selling in gold came in the form of traders booking profits. Still, analysts added, at more than 182,000 contracts, the net long remains at a historically high level.

“The reduction in speculative net-long positions in silver was more pronounced (nearly 30%),” Commerzbank said. “Accordingly, the silver price fell all the more steeply, pushing the gold/silver ratio up to over 93.”

Meanwhile, in silver futures, money managers’ net long slipped to 15,527 futures contracts from 21,923 the prior week. The bulk of the selling came in the form of long liquidation, as total longs fell by 4,909 lots. There were also some fresh shorts, as the number of bearish positions increased by 1,487.

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.