Funds Up Bullish Gold Position, Slash Net Short In Silver
(Kitco News)- Largespeculators slightly increased their net-bullish positioning in gold futures,while slashing their net-bearish stance in silver, during the most recentreporting week for data compiled by the U.S. Commodity Futures TradingCommission.
However,analysts pointed out, the next report - due out Friday - will likely show thatthe bullish posture in gold has since fallen, as prices have weakened since theApril 17 cut-off date for the last CFTC report.
Net-long or shortpositioning in the CFTC data reflect the difference between the total number ofbullish (long) and bearish (short) contracts. Traders monitor the data to gaugethe general mood of speculators, although excessively high or low numbers areviewed by many as signs of overbought or oversold markets that may be ripe forprice corrections.
Duringthe week-long period to April 17 covered by the report, ComexJune gold futures rose by $7.40to $1,350.50 an ounce, while May silver climbed 21.5 cents to$16.785.
“Speculative financial investors showedsomewhat greater optimism towards gold again,” said Commerzbank. “That said,the price slide in the interim suggests that some long positions have alreadybeen covered again.”
Comex gold has lost 1.8% since the cut-off datefor the last report and was trading at $1,325.60 as of 10:49 a.m. EDT Monday.
The disaggregated reportshowed that money managers increased their net-long position in gold futures to132,638 futures contracts from 125,562 in the previous week. This occurred asthe number of gross longs rose by 3,881 lots and the number of total shortsfell by 3,195.
“A range-bound gold [market] only managed toattract small buying interest with traders instead finding a better opportunityin silver,” said Ole Hanson, head of commodity strategy with Saxo Bank.“Silver’s record short was cut by 60% in response to the improved outlook as itbenefited from the tailwind seen across other industrial metals.”
Money managers slashedtheir net-short position in silver futures to 14,757 lots from 37,112 the weekbefore.
TD Securities pointed out that bulls returned to the market at the sametime traders with short positions were forced buy in order to cover, or offset,their trades. This was reflected by a decline of 16,300 gross short positionsat the same time that total longs rose by 6,055.
“However, with money-manager positioning still hovering around extremelows, silver continues to reflect extremely bearish sentiment across thespeculative community,” TDS said. “But while silver's industrial luster givesit a boost and as the precious-metals environment improves amid a flat yieldcurve, shorts could very well be forced to cover. In fact, with prices tradingright below key resistance levels, price action in the coming weeks could leadto a sharp short-covering rally.”
By Allen SykoraFor Kitco News
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asykora@kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.