Speculative Long Gold Positions Increase for Third Straight Week - CFTC

Author: Paul Ploumis
14 Apr 2015 Last updated at 04:11:58 GMT
(Kitco News) - According to some analysts, the latest data from the Commodity Futures Trading Commission (CFTC) shows that short-term traders jumped back into the gold market, boosting speculative long positions for the third consecutive week.

The disaggregated Commitment of Traders Report (COTR), for the week ending April 7, showed money-managed speculative long positions of Comex gold futures almost doubled from the previous week. Gross long positions increased by 8,939 contracts to 112,747. At the same time, short-sellers continued to exit their positions, as short contracts decreased by 10,680 contracts to 57,072. Gold’s net length now stands at 55,675 contracts.

During the survey period, gold prices rallied more than 2%, from $1,183.20 an ounce to $1,210.60 an ounce. Gold’s rally came after the market received several disappointing economic reports, including nonfarm payrolls data, which showed that 126,000 jobs were created in March, well below the consensus of 246,000 jobs.

Commodity analysts at Commerzbank said that gold’s net length has increased “nearly five-fold” in the last two weeks. “This makes it all the more clear that the latest surge in the gold price was largely driven by speculation and is thus on a shaky footing,” they said.

Looking forward, commodity analysts at Barclays said that the sharp drop in short positions could be an indication that gold prices will struggle in the short-term as there will be less short-covering in the marketplace. They said that gross longs are now at their highest level since Feb. 24 and gross shorts are at their lowest level since early March.

“Short term positioning suggests reduced scope for further short covering activity and at the margin, profit-taking is more likely,” they said.

While investors were jumping into the gold market, CFTC data shows that they were shedding their silver positions.

CFTC data showed that money-managed speculative long positions of Comex silver futures fell by 2,621 contracts, to 48,266. Speculative short positions also fell, by 1,771 contracts, to 17,682. Silver’s net length now standing at 30,584 contracts.

During the survey period, Comex May silver futures showed a gain of more than 1%, rallying from $16.620 an ounce to $16.840 an ounce

Analysts from UBS said that the decline in investor interest is mostly due to its high volatility. They add that it is still too early to see resurgence in investor interest in precious metals, “and any participation for now has been limited to more short-term range plays rather than anything directional.”

Courtesy: Kitco News