Money Managers Trim Gold Bullish Positioning, Hike Silver Net Length
(Kitco News) - Large speculators cuttheir net bullish positioning in gold futures but upped their bullish stance insilver during the most recent reporting week for data compiled by the CommodityFutures Trading Commission.
The price action reflectedthose changes in positioning. During the week-long period to June 4 that wascovered by the report, Comex August gold slipped $6.80 to $1,304.10 an ounce,while July silver rose 5.8 cents to $16.431.
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.
The CFTC’s “disaggregated”report showed that money managers trimmed their net long in gold futures to 50,880contracts from 54,001 the week before. This occurred as traders exited from bothsides of the market but closed out more long positions than short. The numberof gross long positions fell by 7,855 lots, while the number of shorts declinedby 4,734.
“We saw a relatively quiet week in metals withgold struggling to break away from $1,300/oz ahead of the near-certain U.S.rate hike on June 13,” said Ole Hansen, head of commodity strategy at SaxoBank.
TD Securities said gold speculators reducedtheir positions with the next FOMC meeting on the horizon. Policymakers meetTuesday and Wednesday. They are expected to hike interest rates another 25basis points, with markets focused on any commentary hinting on the pace offuture tightening.
“Indeed, stronger [U.S.] jobsand wages data, along with unemployment down to 3.8%, helped solidify Fedexpectations,” TDS said. “On the other hand, 10-year rates falling back below3% amid European political drama, and the recent easing of dollar strength,have prevented material weakness.
“Price action will likelyremain muted/slightly weaker heading into the meeting, but a ‘dovish hike’ andtalk of an inflation overshoot could be the catalyst needed to reignite specinterest.”
Meanwhile, in silverfutures, money managers upped their net-long position to 4,619 lots from 791 theweek before. This was mainly due to fresh buying, as gross longs climbed by3,721 contracts.
Hansen commented that silver showed “signs oflife” as the gold/silver ratio hit a four-month low. The ratio measures how many ounces of silverit takes to buy an ounce of gold. A decline means an outperformance by silverprices, and vice-versa.
The small net-long means there is “plenty ofspace for additional buying should the technical and/or fundamental outlook(Industrial metals rally) continue to improve,” Hansen said.
By Allen SykoraFor Kitco News
Follow @AllenSykora
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