Money Managers Trim Bearish Gold Position But May Have Gone Back
(Kitco News) -Money managers trimmed theirbearish positioning in gold during the most recent reporting week for datacompiled by the Commodity Futures Trading Commission, although these accountshave likely reversed course since and are accumulating bearish positions again,analysts said.
During the week-long period toNov. 6 covered by the report, Comex December gold gained $1 to $1,226.30 anounce, while December silver climbed 3.8 cents to $14.50.
Since Nov. 6, however, bothmetals have fallen again, which is why observers say speculators may have againbecome more pessimistic on prices. As of 9:39 a.m. EST, December gold was at$1,205.50 an ounce, while December silver was at $14.04.
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” reportshows that the net-short position of money managers fell to 47,446 futurescontracts as of Nov. 6 from 55,523 the week before. The bulk of the decline wasshort covering, as the number of gross short positions fell by 5,994 lots.There was also some fresh buying, as total longs climbed by 2,083.
Commodities brokerage SP Angelcommented that the data show that money managers were “reluctant to bet againstgold” during the latest CFTC reporting week. TD Securities said that“still-shaky equities and prospects of [U.S. political] gridlock prompted moneymanagers to aggressively cover short positions.”
Nevertheless, money managers havelikely increased their bearish posture since, said Commerzbank.
“Though speculative financialinvestors reduced their net-short positions in gold somewhat in the week to 6November, net short positions are likely to have been increased again in themeantime given that the price has fallen by approximately $30 since then,” theGerman bank said.
TDS said “the Fed's affirmationthat it will be sticking to its preset hiking path prompted the market torevalue lower the strike level on any potential Powell put - which ultimatelyhelped the greenback strengthen and challenged gold prices. With tail risks outof the way, we would not be surprised to see gold length resume its downwardtrajectory for now.”
In the case of silver, the net-shortposition of money managers fell to 20,848 lots from 25,176 the week before asthe amount of short covering exceeded the long liquidation. Gross shortpositions fell by 7,219 lots, while the number of total longs fell by 2,891.
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.