Funds Add To Record Bearish Positioning In Gold
(Kitco News) - Fund managers hiked their recordbearish positioning in gold futures during the latest reporting week for datacompiled by the Commodity Futures Trading Commission.
During the week-long period toAug. 7 that was covered by the report, Comex December gold fell $15.30 to$1,218.30 an ounce, while September silver lost 18.6 cents to $15.373.
Net long or short positioning inthe CFTC data reflect the difference between the total number of bullish (long)and bearish (short) contracts. Traders monitor the data to gauge the generalmood of speculators, although excessively high or low numbers are viewed bymany as signs of overbought or oversold markets that may be ripe for pricecorrections.
Money managers increased theirnet-short position in gold futures to 66,116 contracts, compared to 42,528 theweek before, according to the CFTC’s “disaggregated” report. The bulk of theincrease was due to continued fresh selling, as reflected by an 18,857 increasein total shorts. There was also some long liquidation, as gross longs declinedby 4,731 contracts.
“Gold specs added aggressively totheir already-record shorts this week, while also liquidating a portion oftheir length,” said TD Securities. “Indeed, the persistent U.S. dollar strengthhas kept investors downbeat on the yellow metal's prospects.
“But, stability in the Chineseyuan after a line in the sand was drawn and some safe-haven buying amid turmoilin Turkey should serve to add short-term support. In addition, we look for theflattening yield curve and an eventual easing in the greenback to unwind therecord short positioning as the year progresses,” TD Securities added.
Fred Hickey, founder and editorof the High-Tech Strategist investment newsletter, also described the netbearish positioning as a record but suggested better days may lie ahead forgold. He noted that shorts may soon lose control of the market since prices didnot fall more sharply despite the large number of bearish positions.
“Violent upturn ahead,” he said.
Meanwhile, in silver, the netshort rose to 13,978 futures contracts from 7,942 the week before. As was thecase with gold, the bulk of the selling was fresh shorts, with gross shortsclimbing by 5,293 lots. Some selling also came in the form of long liquidationof bullish positions, as gross longs declined by 743.
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.