Money Managers Hike Bearish Gold Positioning
(Kitco News) - Large speculators increased theirbearish positioning in gold futures by 67% during the most recent reportingweek for data compiled by the Commodity Futures Trading Commission, whichanalysts say accounts for much of the slide in prices during the early part ofNovember.
During the week-long period toNov. 13 covered by the report, Comex December gold fell 2% to $1,201.40 anounce, while December silver lost 3.6% to $13.977.
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.
The commission issues two reportseach Friday -- a so-called “legacy” report and a “disaggregated” report,started in 2009 and meant to offer more detail.
“The price slide that began earlythis month and continued into last week was driven to a large extent byspeculation, as the CFTC’s statistics on the positioning of speculative marketparticipants show,” said analysts at Commerzbank.
However, they added, since theprice has recovered some since the cutoff date for the last CFTC report, someshort positions are likely to have been squared since.
The “disaggregated” report showedthat money managers upped their net-short position to 79,194 contracts from47,446 the week before. This was mostly due to fresh bearish positions, as thenumber of total shorts surged by 29,089. There was also some light longliquidation, as gross longs fell by 2,659 lots.
Analysts at TD Securities saidtraders re-entered short positions in gold as the U.S. dollar made freshlongtime highs in response to a hawkish Federal Reserve Chairman Jerome Powell.
“But shortly after printing the$1,200/oz mark, the yellow metal was rescued by safe-haven bids and shortcovering,” TDS said. “Indeed, European politics in the form of thorny Brexitnegotiations provided some interest, while Fed speakers on Friday sounded amuch more dovish tone in regards to a global slowdown which saw the greenbackand rates come off the highs.
“These factors should provideshort-term support, but we maintain the view that a fundamental shift in thestrong dollar regime will be needed before gold can break materially higher.”
In silver futures, moneymanagers’ net-short positioning nearly doubled to 40,833 lots from 20,848 theweek before. These accounts hiked their gross shorts by 16,035 lots, whiletrimming longs by 3,950.
“In our opinion, this means thatspeculative financial investors were also chiefly responsible for the latestpronounced slide in the silver price to below the $14 per troy ounce mark,”Commerzbank said.
By Allen SykoraFor Kitco News
Follow @AllenSykora
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