SMM: Kitco News said in a report released on Monday that data compiled by the Commodity Futures Trading Commission (CFTC) showed that big speculators had rebuilt bullish positions in gold futures in the most recent reporting week.
Comex gold for the month ended Dec. 17 rose $12.50 to $1480.60 an ounce, while silver for March rose 37 cents to $17.072 an ounce.
Net long or short positions in the CFTC data reflect the difference between bullish contracts and bearish contracts (the difference between the total number of contracts). Traders monitor the data to measure the overall mood of speculators, although most believe that too high or too low is a sign of overbuying or overselling in the market, but price adjustments may have begun by the time the data are released.
Net long positions of fund managers rose to 201721 in the week to December 17 from 183648 the previous week, according to the breakdown. Most of the increase was new buying, reflecting a 15687 increase in long positions. At the same time, there was some short cover, with the total number of short positions reduced by 2386.
But bullish positions fell the previous week and rebounded the day after the Dec. 10 data close. Some analysts linked it to the Fed's FOMC meeting statement, which remained dovish after its December 11 meeting, despite keeping interest rates unchanged.
Phil Flynn, senior market analyst at Price Futures Group, said low interest rates led to expectations of rising inflation. Some investors buy gold as a hedge against inflation.
"as major central banks keep interest rates low, we will see gold buying because we expect more demand in the new year," Flynn said. " "some people also use gold to hedge against the rising stock market."
If stocks suddenly fall sharply from recent record highs, they also see gold as a safe haven, he explained.
On the silver front, fund managers' net long positions in futures contracts rose to 35479 from 29212 the previous week. This was due to new purchases (total short increased by 3622) and short cover (total short decreased by 2645).
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