(Kitco News) - While bullish speculation in gold remains crowded, one market strategist argues it's not the main driver behind recent price moves.
The latest trade data from the Commodity Futures Trading Commission shows that, as of the week ending July 18, money managers increased their bullish bets by 7,972 contracts to a total of 172,657. At the same time, they reduced their short positions by 13,763 contracts to 22,625.
Gold’s net length now stands at 136,726 contracts, roughly in line with the sideways trend observed over the past month.
In her latest note on gold, Suki Cooper, Precious Metals Analyst at Standard Chartered Bank, noted that net positioning as a percentage of open interest has hovered around 31% for the past seven weeks.
She pointed out that open interest remained stable through early July as President Donald Trump issued new import tariff threats amid his ongoing trade war. She added that although tactical positioning remains firmly positive and crowded, it has also become a key driver of recent price action.
However, Cooper said that instead of speculative positioning, she is closely monitoring investment demand in global gold-backed exchange-traded products (ETPs), where inflows reached their highest level in five years during the first half of 2025.
She also noted that holdings in gold ETPs remain well below the record highs set in 2020.
“Gold ETP inflows have slowed in July thus far but remain broadly positive, and total holdings are still 300 tonnes shy of the October 2020 peak,” she said. “Short interest in the largest gold ETP dipped in the last two weeks of June, suggesting growing conviction in upside price risk. During the seasonally slow consumption period, ETPs will likely remain a key factor to watch in determining gold’s price range.”
In addition to tracking ETP investment demand, Cooper said she is also monitoring the U.S. dollar. She explained that further weakness in the greenback should support gold prices.
“Gold prices may not have responded as strongly as earlier this year to tariff announcements but continue to show their strongest relationship with the USD, with a three-month rolling correlation at -70%, while their correlation with real yields has begun to edge back into negative territory at -17%,” she said. “Gold is attracting less safe-haven demand in the current environment but continues to take its cue from the USD. Concerns around rising U.S. debt continue to buoy interest in gold. Growth in U.S. debt and further tariff updates are likely to keep gold in focus, and for now, the floor appears well supported.”
Gold is starting the new trading week on a relatively firm footing, with prices testing resistance at $3,400 an ounce. Spot gold last traded at $3,399.32 an ounce, up 1.47% on the day. The new momentum comes as the U.S. dollar index drops below 98 points.
Cooper also remains bullish on gold as central banks continue to increase their official reserves, even though the pace of purchases has slowed in recent months.
“Official sector buying has shown signs of slowing, but central bank buying persists despite record prices and has not shifted to net selling,” she said.
