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(Kitco News) – As expected, the latest data from the Commodity Futures Trading Commission shows a significant shift in the gold market after last week’s flash crash with hedge funds and fund managers liquidating their bullish bets and adding to the bearish positioning.
“Perhaps it would be more accurate to say that they fled in panic,” said Daniel Briesemann, Precious Metals Analyst at Commerzbank.
The CFTC disaggregated trader commitments report for the week ending August 10 showed that fund managers had abandoned their raw speculative long positions on Comex gold futures contracts of 21,028 contracts at 111,892. At the same time, short positions increased from 33,442 contracts to 76,489.
The net length of gold now stands at 35,000 contracts, down nearly 64% from the previous week. Gold’s net length is currently at a five-month low.
The latest trade data includes price action on Sunday night, where 24,000 gold futures valued at $ 4 billion were gold at the start of the Asian trading session.
“The good jobs data has prompted markets to believe the Fed is more likely than not to slowly start reducing the monetary accommodation, starting with cutting its asset purchase program. The higher rates partners and the more positive USD expectations have convinced traders to increase their short positions sharply as they bet on lower prices and cut long positions thinking that a rise is unlikely, ”said commodities analysts at TD Securities. “As the Delta variant lowers expectations for economic growth around the world, it is likely that specifications may well continue to hedge in the short term amid the recent price rebound.”
According to some analysts, last week’s rebound from its multi-month low created a strong technical bullish chart after gold maintained a critical support level. Some analysts have noted that the sharp reduction in gold’s bullish positioning could have been much worse.
John Reade, chief gold strategist at the World Gold Council, said in a Twitter comment that speculative positioning has been much more bearish in previous years.
The extent of the long run-off seen last week, while significant, is not remarkable compared to other run-offs seen over the past 15 years. pic.twitter.com/75Ly1CqHrs
– John Reade (@JReade_WGC) August 16, 2021
It is not only gold that is suffering from a shift in speculative positioning. Sentiment among hedge funds has turned considerably bearish, according to the latest trade data.
The disaggregated report showed that speculative gross long positions managed by money on Comex silver futures fell from 4,247 contracts to 46,631. At the same time, short positions jumped by 9,423. contracts at 34,891.
Net silver length stands at 11,740, down almost 54% from the previous week. The price of silver declined by almost $ 3 during the period of investigation, with prices falling to a multi-month low at $ 22.28 per ounce.
Commerzbank noted that the net length of silver is at its lowest point since May. However, they see the development of gold and silver prices as a positive development.
“This will undoubtedly have seen a number of shaking hands dissipate from the market, both for gold and silver. We see this as a positive adjustment, as confirmed by the price trends of the last few days.” , said Briesemann.
While gold and silver have been hit the hardest by commodities, hedge funds have also increased their bearish stance on copper.
The Disaggregated Copper Report showed that speculative gross long positions managed by money on Comex’s high-grade copper futures contracts fell from 2,815 contracts to 62,475. At the same time, short positions increased. increased from 4,729 contracts to 31,373.
Copper net length fell to 31,102 contracts, down 19.5% from the previous week. During the IP, the price of copper fell below initial support at $ 4.30 per pound.
Warning: The opinions 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 the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to trade in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.
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