Gold Net Longs Fall At Fastest Pace In Three Months, Silver In Five Years - CFTC
New York (Jun 15) Gold traders shed their long positions at the fastest pace in three months; silver longs fell at their fastest pace in more than 5 years, according to the latest data from the Commodity Futures Trading Commission (CFTC).
chartThe disaggregated Commitment of Traders Report (COTR), for the week ending June 9, showed money-managed speculative long positions of Comex gold futures fell by 4,104 contracts to 121,125. At the same time, short-sellers increased their positions by 20,004 contracts to 83,486. Gold’s net length now stands at 37,639 contracts.
Commodity analysts at Bank of America Merrill Lynch noted that gold short sellers have increased their positioning for three consecutive weeks.
At the same time gold investors are, exiting their positions as they become increasing frustrated with the lack of upward movement in the price, said analysts at Commerzbank, in a research note published Monday. Gold’s inability to attract safe-haven flows as the likelyhood of Greece defaulting on its debt increases, is just one example of how investors have become disappointed in the gold market, they said. Commerzbank noted that net longs dropped 37% compared to the previous week.
“Given the poor performance of gold and silver prices, money managers are clearly losing their patience and betting increasingly on falling prices,” they said.
During the survey period, August gold Comex futures saw consistent selling pressure as priced dropped by almost 1.4% during the week, falling to $1,162.10 an ounce - its lowest point since March 19.
Looking forward, analysts at UBS said, in a note released Monday, the strong increase in short positions could gold’s downside, especially as the Federal Reserve releases its monetary policy statement, and updated forecasts Wednesday.
“Gold positioning has already declined considerably in recent weeks, limiting the firepower to any further selling. As such, we would expect gold to eventually stabilize and find itself still within the established range,” they said.
Looking at the silver market, the precious metal saw a significant decrease in its net length. The disaggregated COTR showed money-managed speculative gross long positions of Comex silver futures fell by 4,453 contracts to 44,341. At the same time, short contracts rose by 23,807 to 35,651. Silver’s net length now stands at only 8,690 contracts.
During the survey period, July Comex silver futures dropped more than 5%, falling below $16 an ounce, and hitting a low of $15.88 an ounce.
Although silver futures have seen a significant reduction in price and speculative positioning, Bank of America remain bearish on the metal. Analysts at UBS noted that silver short positions are only sitting at 82% from their all-time high; however, they added that short bets appear to be overdone.
“The speed and magnitude of the increase suggests that the risks of a short squeeze are currently elevated,” they said.