Money Managers Increase Bullish Positioning In Gold Futures
(Kitco News) - Large speculatorsincreased their net bullish positioning in gold futures and moved into a smallnet-long position for silver during the most recent reporting week for datacompiled by the Commodity Futures Trading Commission.
During the week-longperiod to May 29 covered by the report, Comex August gold rose $6.70 to$1,304.10 an ounce, while July silver lost 20.2 cents to $16.373.
Net long or shortpositioning in the CFTC data reflect the difference between the total number ofbullish (long) and bearish (short) contracts. Traders monitor the data to gaugethe general mood of speculators, although excessively high or low numbers areviewed by many as signs of overbought or oversold markets that may be ripe forprice corrections.
The CFTC’s “disaggregated”report showed that money managers upped their net long in gold futures to54,001 contracts from 16,531 the week before. This occurred on a combination offresh buying, as reflected by a 16,471 increase in gross longs, plus shortcovering, as indicated by a decline of 20,999 total shorts.
“Speculators aggressivelyadded to their longs in gold and likely took profits on their shorts as theItalian crisis and deteriorating trade relations convinced money managers toseek safe-haven assets,” said a research note from TD Securities.
Sean Lusk, director ofcommercial hedging with Walsh Trading, said in an interview with Kitco Newsthat the market was helped by the political uncertainty in Europe and ongoinggeopolitical issues, with buying also picking up again as gold pricesapproached a key technical-chart support area.
He commented that somebuying in the form of bargain hunting set in after the price pullback.
“We had some fundwithdrawals. Now, they’re putting them [bullish positions] on again,” Lusksaid, adding that gold has shown some signs of stabilizing.
TD Securities said goldcould “underwhelm” this week as recent positive U.S. economic data and higheroil prices mean potential increases in U.S. interest rates.
“A solid nonfarm reportwill likely see the yellow metal trade lower towards $1,280/oz, but we expectthe impact on rate expectations to be muted, which should prevent any rout,”TDS said.
Meanwhile, in silverfutures, the market flipped to a small net-long position of 791 contracts froma small net short of 590 the week before. Buying by money managers outpaced theselling, as total long positions rose by 3,611 contracts and total shortsclimbed by 2,230.
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.