Money Managers Resume Building Bearish Gold Positioning
(Kitco News) - Money managers resumed buildingbearish positioning in gold and silver futures during the most recent reportingweek for data compiled by the Commodity Futures Trading Commission.
This comes after these accountshad trimmed their bearish posture in the prior week’s report.
During the week-long period toSept. 4 covered by the most recent data, Comex December gold fell by $15 to$1,199.10 an ounce. December silver lost 71.9 cents to $14.18.
“The nascent recovery in goldappears to be cut short as hedge funds continue their bearish bets in bullionfutures and options,” said a research note from commodities brokerage SP Angel.
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 CFTC’s “disaggregated” reportshowed that money managers upped their net-short position in gold futures to82,722 contracts from 75,772 the week before.
TD Securities pointed out thatlarge speculators both liquidated long positions and resumed adding shortsafter these accounts had been buying to cover shorts in the previous CFTCreporting week. In the week to Sept. 4, money managers’ long positions fell by4,320 contracts, while there was an increase of 2,630 fresh shorts.
“The yellow metal has found itsfooting just below $1,200/oz, but the current environment remains unattractivefor precious metals, making it unlikely that the yellow metal will be able tomuster any sustainable rally in the near term,” TDS said. “Indeed, as the U.S.economy continues to perform well, highlighted by the recent jobs report whichshowed strong wage inflation, and emerging markets remain under pressure, ratesand the dollar will continue to constrain precious metals.
“A roaring U.S. economy suggeststhat the Fed will continue with the path of hikes indicated by the dots andthat the U.S. dollar will remain attractive, especially as EM [emerging-market]weakness continues.”
Nevertheless, the sizeablebearish positioning “is supportive for further short covering,” said MKS(Switzerland) S.A. However, the market would need a catalyst.
Meanwhile, in silver, thenet-short position of money managers increased to 48,923 contracts from 35,705the week before. The majority of the increase was fresh selling, as reflectedby an increase of 8,347 shorts. There was also long liquidation, with grosslongs declining by 4,871 contracts.
By Allen SykoraFor Kitco News
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