By Neils Christensen

Monday February 20, 2017 11:35

(Kitco News) - Hedge funds took profits in gold for the first time in three weeks as prices hit nearly a three-month high, according to the latest trade data from the Commodity Futures Trading Commission.

The disaggregated Commitments of Traders report, for the week ending Feb. 14, showed money managers reduced their speculative gross long positions in Comex gold futures by 6,803 contracts to 135,739. At the same time, short bets fell by 279 contracts to 72,114. Gold’s net length now stands at 63,625, contracts, down 9% from the previous week.

During the survey period prices rallied to a three-month high; however, the gains were short-lived as prices eventually end the period down almost 1%.

“Strong US economic data, speculation the US administration will deliver fiscal stimulus, along with Fed statements pointing to possible imminent rate hikes convinced specs to materially reduce gold length,” said Bart Melek, head of commodity strategy at TD Securities.

Looking ahead, Jonathan Butler, precious metals strategist at Mitsubishi said that investor interest in gold is tied strongly to President Donald Trump.

“Whether investors continue to rotate away from non-yielding gold and towards risk assets depends on how soon details of President Trump’s fiscal stimulus plans become clearer,” he said.

While Hedge funds have limited their exposure in gold, they continue to see potential in silver, increasing their speculative positioning. According to analysts from Commerzbank, money managers have increased their bullish exposure in gold every week since the start of the year.

“In other words, speculative financial investors have played a major part in the 13% rise in the silver price since the beginning of the year,” they said.

The disaggregated report showed money-managed speculative gross long positions in Comex silver futures rose by 6,041contracts to 84,040. At the same time, short positions fell by 464 contracts to 11,874. Silver’s net length now stands at 72,166 contracts, up 10% from the previous week.

Analysts at Commerzbank said that silver’s net length is now at its highest level since September. The buying momentum helped silver hold near its highest levels in three months, with prices rising almost 1% during the survey period.

“While safe-haven demand for gold has been fairly muted so far, silver continues to enjoy rising demand with the recent surge in industrial metals,” said Ole Hansen, head of commodity strategy at Saxo Bank.