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Investors Jumping Back Into Gold, Silver But Markets Still Net Short - CFTC
Aug 19,2015 11:07CST
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The latest CFTC data indicates that a small portion of investors have started jumping back to gold and silver.

By Paul Ploumis 18 Aug 2015  Last updated at 05:39:23 GMT

The latest CFTC data indicates that a small portion of investors have started jumping back to gold and silver.

(Kitco News) - A small amount of investors started to jump back into the gold and silver, helping to push prices to a three week high, according to the latest data from the Commodity Futures Trading Commission (CFTC).

However, despite the increase in gross long position, both gold and silver future markets are net short.

According to the disaggregated Commitment of Traders Report (COTR), for the week ending Aug. 11, money-managed speculative gross long positions of Comex gold futures rose by 4,934contracts to 108,507. At the same time, short-sellers exited to their positions by 923 contracts to 113,937. Gold futures are net short by 5,430 contracts.

Mike Dragostis, vice president and senior commodity strategist at TD Securities noted that the increase in long positions and little short covering was mostly due to the fact that investors were looking for safe-haven assets after China devalued its currency early last week.

During the survey period, Comex December gold future saw some consistent gains, rising 1.9% and pushing back above $1,100 an ounce.

Commodity analysts at Barclays said, in a report Monday, because of gold’s extended short position they see some room for prices to move higher on renewed short-covering.

“CFTC data shows the net position in gold remains short for managed money, indicating still crowded short positions in gold,” they said. “We continue to see extremely short positioning as a potential source of volatility for gold.” 

However, not all analysts are optimistic that prices can move higher in as investors jump back into gold. Alex Thorndike, said in a note, also published Monday, that stronger inflation data out later this week and the release of the minutes from the July Federal Open Market Committee (FOMC) meeting on Wednesday could great some renewed short selling and push down prices.

“Going forward we expect focus to shift back to the U.S. this week, with the CPI and Fed minutes being important and if they both point to a potential rate rise in September gold and the complex in general will be back under pressure and may test support between $1100-1106.

Unlike gold, the silver market saw significantly more short covering in the CFTC data and some modest new buying positions. 

The disaggregated COTR showed money-managed speculative gross long positions of Comex silver futures rose by 2,485 contracts to 41,980. At the same time, short contracts fell by 8,374 contracts to 42,213. The silver market is net short by 233 contracts.

The short covering during the survey period, drove Comex silver future prices up by more than 5%, as prices pushed solidly above $15 an ounce.

However, this might not be the start of a new uptrend. Dragostis said that this move appears to be driven by “weak hands” on the short side, and investors continue to sit on the sidelines.

Courtesy: Kitco News

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