Are The Gold Bears Getting Tired?
(Kitco News)- Accordingto some analysts, there is further evidence that gold’s selling momentum isrunning out of steam as the latest trade data from the Commodity FuturesTrading Commission showed little change in bearish gold sentiment.
TheCFTC's disaggregated Commitments of Traders report for the week ending July 3showed money managers increased their speculative gross long positions in Comexgold futures by 3,127 contracts to 107,402. At the same time, short bets roseat a slightly faster pace, increasing by 4,400 contracts to 109,929. Gold's net-shortpositioning stands at 2,527.
Thecontinued selling pressure kept gold prices at the bottom end of their currentrange near a one-year low, below the critical psychological level of $1,250 anounce.
BillBaruch, president of Blue Line Futures, said that despite the continuedweakness, he still sees value in gold at current levels.
“Theoverall managed-money short position of 109,929 contracts is the highest levelsince December 2015 when gold bottomed, and shorts amassed 110,836 contracts,”he said.
Commodityanalysts at Commerzbank continue to be frustrated with the price action in thegold space as they don’t think the selling pressure justifies the current pricelevel.
“Admittedly,speculative market participants have been betting for the most part on fallinggold prices - they have not significantly expanded their net-short positions inthe past two weeks,” they said.
Whilesome investors are optimistic on gold as a contrarian investment opportunity,others note that the market still has one dominant beast to fight: the U.S.dollar.
In arecent interview with Kitco News, Lukman Otunuga, research analyst at FXTM,warned investors that gold will continue to be at the mercy of the U.S. dollar.He added that a surging U.S. economy and expectations of tighter monetarypolicy will continue to support the greenback and weigh on gold prices.
“Eventhough there is a lot of uncertainty, it seems that the U.S. dollar continues tosteal gold’s spot as the new safe haven,” he said. “Economic sentiment for theU.S. economy remains extremely bullish, so investors are more inclined to buyU.S. dollar and equities than gold.”
Someanalysts have noted that despite gold’s extended bearish positioning, themarket could see further selling in the current environment as season factorswill also weigh on sentiment.
Thesilver market also saw a modest increase in bearish sentiment last week. Theprecious metal has seen its net-long positioning contract fall for fourstraight weeks.
Thedisaggregated report showed money-managed speculative gross long positions inComex silver futures fell by 3,434 contracts to 68,829. At the same time, shortpositions also fell by 1,240 contracts to 61,002. Silver’s net length currentlystands at 7,827, only slightly lower from the previous week’s level.
The modest selling pressure was enough to keepsilver prices near a one-year low, below $16 an ounce.
For Kitco News
Follow neils_C
nchristensen@kitco.comwww.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.