(Kitco News) – Large speculators upped their net bullish positioning in gold futures while trimming their bearish posture in silver during the most recent reporting week for data compiled by the Commodity Futures Trading Commission.
“Gold and silver put up a fight against the stronger dollar, with both managing to hold onto key support at $1,300/oz and $16/oz, respectively,” said Ole Hansen, head of commodity strategy at Saxo Bank
Net long or short positioning in the CFTC data reflect the difference between the total number of bullish (long) and bearish (short) contracts. Traders monitor the data to gauge the general mood of speculators, although excessively high or low numbers are viewed by many as signs of overbought or oversold markets that may be ripe for price corrections.
The commission issues two reports each Friday — a so-called “legacy” report and a “disaggregated” report, started in 2009 and meant to offer more detail.
The CFTC’s disaggregated report showed that money managers’ net-long position in gold futures upticked to 41,639 contracts from 39,317 lots the week before. This occurred as the amount of short covering outpaced the long liquidation, as traders were exiting positions on both sides of the market. The number of total longs fell by 9,556 lots, while the number of total shorts fell by 11,878.
“Gold speculators marginally increased their net length this week, as a resurgent dollar imposed a drag on prices, but the FOMC [Federal Open Market Committee members] advised that their inflation target was ‘symmetric,’” said TD Securities.
“This suggests the Fed is ready to maintain its ‘go-slow’ approach despite an uptick in inflation, implying that real rates are set to remain low, which convinced the bears to cover their shorts. However, as the DXY [dollar index] broke through 92.50 resistance, with the yellow metal nearing $1,300/oz technical support, some bulls were also convinced to liquidate their longs.”
In the case of silver, speculators scaled back their net short slightly to 19,483 futures contracts from 23,886 contracts the week before. This was mostly due to fresh buying, as the number of longs rose by 4,624.
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