Money Managers Sharply Increase Net-Long Position In Comex Gold - CFTC Data

By Allen Sykora of Kitco News

Monday June 13, 2016 12:35

(Kitco News) - Money managers upped their net bullish positioning in gold futures by 19% in the most recent weekly report from the Commodity Futures Trading Commission, as the market started to factor back in a reduced probability of the Federal Open Market Committee hiking interest rates this summer.

During the week-long period to June 7 covered by the data, Comex August gold rose $29.50 to $1,247 an ounce. This period includes the sharp price rise on June 3, the day the Labor Department released a report showing that U.S. nonfarm payrolls rose a paltry 38,000 last month. Afterward, markets quickly started scaling back expectations of Fed tightening after they had been rising during the latter part of May due to hawkishly construed comments from some policymakers.

The next CFTC report may well show still more net length, as gold has continued to rally since, with August futures inching just above $1,290 an ounce so far in trading on Monday.

Net long or short positioning in the CFTC data reflect the difference between the total number of bullish and bearish contracts. Traders monitor the data to gauge the general mood of speculators, although excessively high or low numbers are viewed as signs of overbought or oversold markets that may be ripe for price corrections.

The commission issues two reports each Friday -- a so-called “legacy” report and a “disaggregated” report, started in 2009 and meant to offer more detail.

Commerzbank commented that while exchange-traded-fund holdings of gold have been higher lately, plus the most recent CFTC data show that futures speculators also have been driving gold higher.

The disaggregated report shows that money managers upped their net-long position to 177,366 futures contracts, compared to 148,611 for the prior week-long period. The increase comes after these speculators had slashed their net-long by some 30% over the two preceding weeks, Commerzbank said.

The bulk of the increase in net bullish positioning was the result of fresh buying, as the number of total longs climbed 19,901 to 212,061. There was also significant short covering, however, in which traders bought in order to exit short, or bearish, trades. This is reflected by a decline in number of gross shorts by 8,854 lots to 34,695.

Meanwhile, large speculators scaled back their silver net length to 49,161 futures contracts from 53,916 the week before. The number of gross longs fell by 2,529 to 68,148, while the number of total shorts rose by 2,226 to 18,987.

During the time period covered by the most recent CFTC report, Comex July silver rose by 40 cents to $16.394.