Money Managers Slash Bullish Positioning In Gold Futures
(Kitco News)- The most recent data fromthe Commodity Futures Trading Commission confirms what many analysts werepredicting - money managers sharply reduced their bullish positioning in goldduring the latest reporting week.
The CFTC late Fridayreleased positioning data for the week through Tuesday, June 19. Since pricesfell sharply a few days after that cut-off date, expectations were that thelatest report would show that hedge funds scaled back their bullish posture,and that’s exactly what happened.
During the week-longperiod to June 19 that was covered by the report, Comex Augustgold fell by$20.80 to $1,278.60 an ounce, while July silver lost 56.8 cents to $16.323.
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 the net-long position of money managers fell to 10,528contracts from 55,504 the week before. The biggest share of the decline wasfresh selling, as the number of short positions soared by 34,960 lots. Therewas also a material exodus from bullish positions, as the number of total longsfell by 10,016.
Commerzbank analysts saidgold faced a “considerable headwind from speculative financial investors”as the net long declined to the lowest level in two and one-half years, thereby“contributing significantly to the slide in the gold price.”
PhilFlynn, senior market analyst with at Price Futures Group, commented that goldhas been hurt lately by strength in the U.S. dollar.
“Thereis some concern that the [U.S.-]Chinese trade war could lower Chinese demandfor gold,” he said. Presumably, if China’s economy slows, Chinese citizenswould have less money to spend on the precious metal.
Additionally,Flynn said, some gold bulls may have simply thrown in the towel since theprecious metal has been unable to stage a meaningful rally for weeks now.
“Becausethe market hasn’t performed well, people are shying away from gold,” Flynnsaid.
Bullish money-managerpositioning in silver also fell although many of the fresh longs from the weekbefore remained in the market. The net-long position of these accounts declinedto 27,736 futures contracts, down from 40,744 in the week to June 12 but stillseveral times higher than the 4,619 net-long position as of June 5.
During the most recentreporting week, the number of gross longs fell by 8,665 after they hadincreased by 20,103 during the prior reporting week. Meanwhile, the number oftotal short positions climbed by 4,343 lots.
By Allen SykoraFor Kitco News
Follow @AllenSykora
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