Money managers increase net-bullish gold positioning

Money managers increase net-bullish gold positioning by Allen Sykora for KitCo News

Money managers upped their net-bullish positioning in gold futures modestly during the most recent reporting week for data compiled by the Commodity Futures Trading Commission (CFTC).

During the week-long period to March 24 covered by the last CFTC report, April gold rose by $135.20 to $1,663.30 an ounce, while May silver climbed $1.762 to $14.257.

Net long or short positioning in 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 CFTC’s “disaggregated” report showed that money managers slightly upped their net-long position to 157,409 futures contracts from 154,079 the week before, which in turn had been the lowest level since last summer. The modest increase in net length this time occurred as the short covering outpaced the long liquidation. Total bullish positions fell by 6,014 lots, leaving 158,965 in all. Meanwhile, short positions declined by 9,344, leaving a mere 1,556 bearish contracts among money managers.

TD Securities pointed out that the CFTC data cover the time period during which the Federal Reserve instituted aggressive quantitative easing and U.S. lawmakers were working to craft stimulus legislation.

“In fact, amid extremely shallow market depth, we suspect that liquidity takers, such as discretionary money managers and CTAs [commodity trading advisers] among others, swarmed the market and contributed to a large dislocation in the yellow metal’s basis this week,” TDS said. “Physical prices significantly underperformed Comex futures, as COVID interfered with transportation logistics. Looking forward, we see a path for $2,000/oz gold prices.”

Money managers trimmed their their net-bullish stance in silver to a net long of 14,011 futures contracts from 21,938 the week before.

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