Are The Bears Losing Their Grip On Gold Prices? - Analysts Ask
(Kitco News)- Gold continues to hold critical support around $1,200 an ounce as speculativebearish bets remain at historic highs, according to the latest trade data fromthe Commodity Futures Trading Commission (CFTC).
TheCFTC's disaggregated Commitments of Traders report, for the week ending Sept.18, showed money managers dropped their speculative gross long positions inComex gold futures by 2,689 contracts to 97,904. At the same time, short bets increasedby 4,555 contracts to 180,367. Gold’s net-short positioning currently stands at82,463 contracts.
“Speculativefinancial investors remain skeptical towards gold: net short positions climbedto 82,500 contracts again in the week to 18 September. This also completelyreversed the previous week’s decline again,” said analysts at Commerzbank in areport Monday.
Gold’snet short positioning saw little change from the previous week and remains nearAugust’s historic levels. However, despite the increased selling pressure, manyanalysts note that gold bears are losing control over the market. For the lastsix weeks, gold prices have been stuck around $1,200 an ounce.
Whilemarket participants continue to watch money manager positioning in the goldmarket, as this speculative “hot money,” can define the market’s short-termtrend, many analysts are paying more attention to commercial positions whichremains positive for the first time since 2001.
Commercialtraders are traditionally net short as this group is made up of gold producers,and merchants that are hedging their positions in the marketplace.
Ronald-PeterStoeferle, fund manager at Incrementum AG and one of the authors of the annual “InGold We Trust” report, said in a recent interview with Kitco News that he seesthe price action in gold as a coiled spring that is on the verge of breaking.
“Commercialpositioning in gold looks particularly exciting for investors,” he said. “Ithink this is the best set up we have seen in gold in 16 or 17 years,” he said.
Althoughspeculative positioning remains bearish, many analysts say that the market ispoised for a short-covering rally; however, prices need to get above criticalresistance at $1,236 an ounce before short sellers feel the pressure.
Formany analysts, the spark to ignite a rally could come this week after theFederal Reserve monetary policy meeting. There are growing expectations thatthe central bank will tone down its hawkish stance on interest rates or atleast leave the trajectory of interest rates unchanged.
“Goldhas often gained following a Fed rate hike in the past,” said analysts atCommerzbank.
However,commodity analysts at TD Securities said that they are not expecting gold tobreak out of its current rut in the near-term.
“Withthe trade situation still very uncertain and the Fed set to increase interestrates next week, we do not anticipate any substantial rally or increased speculativepositioning in precious metals,” they said in a report Friday.
Thesilver market also continues to struggle to attract attention as investorsreduce their exposure to the precious metal across the board.
Thedisaggregated report showed money-managed speculative gross long positions inComex silver futures dropped by 738 contracts to 52,301. At the same time,short positions fell by 2,062 contracts to 99,047. Silver’s net-shortpositioning was relatively unchanged from the previous week at 46,751contracts.
Thisis the second week in a row that both the bulls and bears lowered their exposureto silver, which has struggled against its peers. The gold-silver ratiocontinues to hold near a more than 20-year high at 84.16 points.
Duringthe survey period, silver prices were relatively stable as it struggles to findmomentum below critical resistance at $14.50 an ounce.
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