Money Managers' Net Bullish Positioning In Gold Futures Disappears
(Kitco News)- Money managers have reversed to atiny net-short position in gold futures, the first time they have not been netbullish in more than two years, according to the most recent weekly data fromthe Commodity Futures Trading Commission.
During the week-long period toJune 26 that was covered by the report, Comex August gold fell by $18.70 to$1,259.90 an ounce, while July silver lost 7.3 cents to $16.25.
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 by manyas signs of overbought or oversold markets that may be ripe for pricecorrections.
The CFTC’s “disaggregated” reportshowed that money managers had a small net-short position of 24 contracts aftera net long of 10,528 the week before. Analysts at Commerzbank noted that thiswas the first time the market was net short in gold in two and one-half years.
“Short positions, in particular,were built up, which means speculative financial investors are currentlybetting heavily on falling prices,” Commerzbank added.
Analysts were referring to an11,100 rise in gross short positions, which more than offset a more modest548-lot increase in gross longs.
This occurred as the technicaloutlook for gold deteriorated below $1,285 an ounce, said Ole Hansen, head ofcommodity strategy with Saxo Bank.
“Following central-bankdivergence which precipitated USD [U.S. dollar] strength, particularly againstemerging-market currencies, even consolidating interest rates and growing tradeangst were unsuccessful in sparking interest in gold,” said TD Securities. “Infact, money managers continued to reduce their net length, adding shorts inresponse to downward momentum and technical indicators, while longs stayed onthe sidelines as investor interest fades.
“But we suspect it is too earlyto write gold's obituary as the USD is set to resume its downward trajectorywhile the yield curve continues to near inversion.”
Meanwhile, in silver futures, thenet-long position of managed-money accounts declined to 22,061 futures contractsfrom 27,736 the prior week. This was mainly due to fresh selling as the numberof short positions rose by 4,790, although there was also some longliquidation, as reflected by a decline of 885 gross longs.
By Allen SykoraFor Kitco News
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