Hedge funds reject gold, but bears are still hiding

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(Kitco News) – Growing investor optimism and trade tensions between the US and China have prompted hedge funds to take profits on their gold holdings, but they are reluctant to place bearish bets on precious metal, according to the latest trade data from the Commodity Futures Trading Commission.

The CFTC Trades Commitments report for the week ending September 10th showed that the portfolio managers have abandoned their 25x700x long-term speculative gold futures in 25,700 contracts at 239,475. At the same time, short bets fell much more slowly, from 255 to 33,294. The net long position of gold currently stands at 206,181 contracts, a decrease of almost 11% over to the previous week.

"Gold, the metal safe haven, has seen its biggest sales week since April, after the pendulum of the trade war has turned positive again, which has boosted the demand for shares and sales of gold. 39, bonds, "said Ole Hansen, head of product strategy at Saxo Bank.

This long liquidation, due to an improved sense of risk, pushed the gold price below $ 1,500, the lowest level in a month and a 4% decline from the peak. six years old.

"Indeed, as the Fed's optimism dwindled, reports of a possible cease-fire on trade, as well as a disappointing ECB account in the middle of the Disagreements within the central bank have all conspired to bring down gold prices, "said commodity analysts at TD Securities. .

However, even though analysts believe it is even more profitable to take profits in the gold market, they point out that lingering uncertainty will limit downside prospects in the market.

Hansen noted that the gold market still retains strong support above the initial resistance, at $ 1,485 an ounce. He added that hedge funds are not "in a hurry to leave the market in the face of continued growth and geopolitical concerns".

TD Securities analysts said the expected softer global monetary policy would continue to support long-term gold prices.

"We believe that gold will increasingly appear as an attractive asset for fund managers and central bankers, which should see allocations to the yellow metal continue to strengthen in the coming weeks," they said. declared.

While fund managers keep their investments in gold, they reduce their exposure to money.

The disaggregated report showed that speculative gross long positions on money managed Comex money futures had dropped from 2,728 contracts to 83,812. At the same time, short positions fell from 1,432 contracts to 24,226. Silver's net length is currently 59,586 contracts, or 3% of the previous week.

During the period of investigation, silver prices fell by almost 10% from their highest level in two years and are around $ 18 an ounce.