Hedge Funds Bail Out Of Recent Bullish Gold Positions
(Kitco News)- Sentiment remains extremelyvolatile in the gold market as hedge funds liquidated most of their newlyacquired bullish positions and added to their bearish bets, according to thelatest trade data from the Commodity Futures Trading Commission.
“Recently established gold longsgot squeezed once again with quarter-end dollar demand and what turned out tobe a temporary easing of geopolitical risks helped reduce its appeal,” said OleHansen, head of commodity strategy at Saxo Bank.
The CFTC’s disaggregatedCommitments of Traders report for the week ending April 3, showed moneymanagers reduced their speculative gross long positions in Comex gold futuresby 27,490 contracts to 155,590. At the same time, short bets rose by 8,031contracts to 28,948. Gold’s net length currently stands at 126,642 contracts.
While gold’s net length decreasedalmost 22% from the previous week, the price dropped less than 1% during the surveyperiod. Analysts note that gold has been caught in a narrow trade range between$1,300 and $1,350 for nearly three months. Many analysts have described themarketplace as a trader’s market as they buy support and sell resistancelevels.
Commodity analysts at TDSecurities said that easing global trade tensions caused hedge funds to reducetheir bullish bets in gold; however, they added that volatility in equitymarkets should help to support the yellow metal in the near term.
“With equity markets droppingsharply late this week and trade risk re-emerging along with weak US jobs data,it is likely that prices may move up more and we should see length grow aswell,” they said.
Hansen said that he expects goldto continue to struggle as silver significantly underperforms in the precious-metalssector. He noted that bearish bets on silver hit a new record, according to thelatest trade data.
The disaggregated report showedmoney-managed speculative gross long positions in Comex silver futures rose by1,506 contracts to 33,494. At the same time, short positions increased by 7,580contracts to 73,832. Silver’s net-short positioning now stands at 40,338contracts.
Silver’s bearish positioningincreased almost 18% from the previous week; prices dropped close to 1% duringthe survey period.
Many analysts say that the bearish sentiment insilver is unstainable and is significantly oversold.
By Neils ChristensenFor Kitco News
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