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Money managers trim gold bullish positioning to lowest level since May 2019

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(Kitco News) - Money managers trimmed their net-bullish positioning in both gold and silver futures during the most recent reporting period for data compiled by the Commodity Futures Trading Commission.
In the case of gold, the net long is now at the lowest level in more than a year, Commerzbank reported.

During the week-long period to June 9 covered by the most recent CFTC data, Comex August gold fell by $12.10 to $1,721.90 an ounce, while July silver lost 46.6 cents to $17.794.

Net long or short positioning in 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.

The most recent CFTC data cover a period when equities were on an uptrend, pointed out TD Securities. Stocks fell late last week and are lower again early Monday, but the CFTC report covers the time period through last Tuesday.

"Money managers further liquidated their gold length and added some shorts, as concerns emerged over the sustainability of the yellow metal's bull market," TDS said. "After all, global equity indices [were] surging at a record pace, leading to a reversal of safe-haven flows and dampening appetite for gold."

The CFTC's "disaggregated" report showed that money managers' net-long position in gold to fell to 91,087 futures contracts as of June 9 from 100,355 the week before. The bulk of the decline was long liquidation, as the number of bullish positions fell by 7,248 lots. There was also some fresh selling, as reflected by an increase of 1,930 shorts.

Still, TDS said it still looks for money managers to eventually move back into gold.

"We reiterate that those selling gold in response to risk-on are improperly discounting the macro implications — the Fed will maintain its uber-easy policy for the foreseeable future and may even utilize more tools to support yields amid a massive supply of Treasuries," TDS said. "In this context, we continue to expect that money managers will seek to shelter their capital from a prolonged period of negative real rates in gold."

Commerzbank analyst Carsten Fritsch pointed out that the impact of selling in the futures market lately has outpaced the inflows into gold and silver exchange-traded funds. Metal has begun moving back into ETF vaults again after a brief hiatus, he said.

"Having said that, the ETF purchases in gold are being offset by selling on the part of speculative financial investors; their net-long position decreased in the week to 9 June to a good 91,000 contracts, their lowest level since May 2019," Fritsch said. "What is more, this was the fifth reduction in positions in the last six weeks.

"The equivalent of 172 tons has thus been sold, which in fact slightly exceeds the inflows into gold ETFs during the same period. If we add the currently very weak demand in Asian into the mix, we can see why the gold price has repeatedly run out of steam at $1,745 of late."

In silver, money managers' net-long position slipped to 23,022 futures contracts from 26,718 futures contracts as of June 2. The decline was due to fresh selling, as total shorts rose by 4,211 lots, outpacing a 511 increase in gross longs.

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