Gold Futures Index (GOLD)

[Pro-Life]

FOCUS: Speculators Add To Bullish Gold Positions – CFTC Data

04 April 2011, 12:39 p.m.
By Debbie Carlson
Of Kitco News
http://www.kitco.com/

http://www.kitco.com/reports/KitcoNews20110404DeC_focus.html

(Kitco News) - Speculative traders returned to the U.S. gold futures and options market, even as prices slipped slightly, according to U.S. government data.

The Commodity Futures Trading Commission’s weekly commitment of traders report for the week ended March 29 showed funds returned to the yellow metal in both futures and options, as seen in both the disaggregated and legacy reports.

The result was mixed for other metals, though. Speculators slightly lowered their bullish exposure to silver and palladium, but increased their bullish positions in platinum and copper.

The return to the gold market came as June gold prices on the Comex division of the New York Mercantile Exchange fell modestly during the timeframe covered by the CFTC data. June gold settled at $1,417.50 an ounce on March 29, down $11.60 for the week, while May Comex silver rose 71.8 cents to $36.987 an ounce. Nymex July platinum rose a mere 70 cents an ounce to $1,744.10, and Nymex June palladium gained $15.10 an ounce to settle at $752.95. Comex May copper rose 3.35 cents a pound to $4.3465.

In the disaggregated report, the managed-money accounts in gold hiked their net-long position by adding 8,812 gross long contracts and cutting 1,297 gross shorts, bringing the net-long to 199,312 contracts. Producers added gross longs and shorts, adding to their net-short position, while swap dealers lowered their exposure on both sides to gold, cutting their net-long position.

The legacy report saw non-commercials increase longs by 4,071 contracts and shorts by 624 contracts, lifting the net-long position to 213,983 contracts. Commercial accounts significantly cut both gross longs and shorts, but cut more longs than short contracts.

Barclays Capital said in a research note the rise of the funds’ net-long gold position came as a result of new long positions and short covering, pushing the net-long to a one-month high. Further, they note, gold exchange-traded fund holdings have stabilized just above 2,070 metric tons.

Managed-money accounts in silver cut longs slightly and added modestly to shorts, bringing the net-long to 33,540 contracts. The producer sector cut longs and added to shorts, increasing their net-short position, while swap dealers did the opposite: adding to longs and cutting shorts, lowering their net-short.

In the legacy report, non-commercials again cut a few longs and added a few shorts, lowering the net-long position to 40,917 contracts. Commercials added to both sides, but added more gross longs, lowering their net-short position.

On the other hand, positions in silver fell moderately. The price of silver has not been affected, though, and has risen this morning to $38.5 a troy ounce, its highest level in over 31 years. Should financial investors further increase their bets on rising prices, silver should find additional support on this front. The psychologically important mark of $40 a troy ounce appears to be edging to a reachable distance.

Speculators in platinum cut from both sides, but cut more shorts, thus raising their net-long position to 18,273 contracts. Funds in the legacy report added lightly to longs and cut shorts, increasing the net-long to 19,424 contracts.

Managed-money accounts in palladium cut both long and short positions, but cut more longs, lowering their net-long position to 9,507 contracts. Similar action was seen in the legacy report, with the non-commercials lowering the net-long to 10,514 contracts.

The drop in fund length in palladium has slid to its lowest level since July 2009, Barclays said.

Funds in both the disaggregated and legacy report for copper added to longs and cut shorts, which raised their net-long position. In the disaggregated report, the copper net-long is 25,574 contracts. In the legacy report, it is 27,044 contracts.

Commerzbank said copper investors “are clearly increasing their bets on rising prices, though; net long positions rose in the week to March 29 by a good 32% … the highest level in four weeks. “

For further information, please see the CFTC’s website: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm

By Debbie Carlson of Kitco News [e-mail]