Gold Net Longs Fall To 2013 Levels; Analysts Expect More Short Covering
Mar 24, 2015 08:55 GMT Source:Scrap Monster
Tags: gold price, gold net longs
Author: Paul Ploumis24 Mar 2015 Last updated at 05:13:31 GMT
(Kitco News) - Gold speculators cut their long positions, and increased their short positions, in gold futures for the seventh straight week ending March 17, according to the latest data from the Commodity Futures Trading Commission (CFTC).
According to the disaggregated commitment of traders report, money-managed speculative long positions of Comex gold futures dropped by 9,185 contracts to 97,847. At the same time, speculative short positions increased by 20,264 contracts to 78,623. Speculative gold net length now stands at only 19,224 contracts.
Commodity analysts at Commerzbank noted that gold’s net length is now at its lowest point since the end of 2013.
According to analysts, traders and investors were negative on gold during the survey week in preparation for hawkish comments from the Federal Reserve, which never materialized. During the survey period, April gold futures fell to $1,141.60 an ounce, a four-month low. Investors will have to wait until Friday to gauge the latest rally in gold and the impact the Fed’s dovish monetary policy and economic downgrades have had on speculative positions.
Commerzbank analysts added that because of the high number of short sellers in the marketplace, they think the “the headwind faced by the gold price from this side should abate soon.”
Although negative on the gold market, analysts at Barclays said there is a chance to see some more short covering to help further support the yellow metal in the short term.
Alex Thorndike, senior precious metals dealer at MKS SA, said that speculative short positions have grown by about 68% since March 3.
“This would have been a significant catalyst for the price moves in the last few days - with many now on the defensive. It will be interesting to see how aggressively pull-backs will be supported in the coming sessions as some specs may still be looking to unwind weak shorts,” he said.
Unlike gold, silver was still able to attract some investors; however, the buy side was once again overwhelmed by short sellers in the marketplace.
According to the CFTC data, money-managed speculative long positions of Comex silver futures increased by 1,002 contracts to 43,056. However, at the same time, speculative short positions increased by 5,035 contracts to 31,552. Silver’s net length now stands at 11,504 contracts.
Commerzbank said that although silver’s net length is now at a four-month low, there could be a shift in investor sentiment to help support prices moving forward.
During the survey period, Comex May silver future also hit a four-month low, falling to $15.26 an ounce.
