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Money managers modestly trim bullish gold positioning

Kitco News

Money managers modestly trim bullish gold positioning

(Kitco News) Large speculators trimmed their net-bullish positioning in gold futures by 3% during the most recent reporting week for data compiled by the Commodity Futures Trading Commission (CFTC).

Still, during the week-long period to Jan. 21 covered by the report, Comex February gold rose $13.30 to $1,557.90 an ounce, while March silver rose 6.6 cents to $17.808.

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 in the week to Jan. 21, money managers’ net-long position fell to 223,832 futures contracts from 230,459 the week before. There was long liquidation, as reflected by a decline of 4,133 longs. There was also some fresh selling, as gross shorts rose by 2,494 lots.

“It seemed like the situation with Iran had calmed down,” said Phil Flynn, senior market analyst with at Price Futures Group.

Hard feelings between the countries intensified at the beginning of the year when the U.S. launched a drone strike that killed a prominent Iranian general, and Iran responded by firing missiles at U.S. bases in Iraq. Gold rose to a roughly seven-year high.

The metal later eased, however, with liquidation said to be occurring when U.S. and Iranian officials made comments that appeared to de-escalate the conflict.

“That may have changed again over the weekend,” Flynn added, referring to rockets fired at the U.S. embassy in Iraq.

Meanwhile, George Gero, managing director with RBC Wealth Management, said some traders were likely starting to “even out” positions ahead of options expiration on Tuesday.

In silver, money managers’ net-long position came in at 56,558 lots, down modestly from 57,179 in the prior week. The long liquidation (decline of 2,221 longs) outpaced the short covering (decline of 1,600 shorts).

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