Large Speculators' Bullish Gold Positions Fall To Smallest Since December In Latest CFTC Data
New York (Oct 6) Large speculator net-long Comex gold futures and options holdings are at their smallest levels since December, which is also when gold prices created a double-bottom low in 2013, according to data compiled by the Commodity Futures Trading Commission.
In both the disaggregated and legacy reports, the large speculators bullish gold holdings fell to Dec. 31 levels in the current CFTC data, which is for the week ended Sept. 30. On Dec. 31, Comex gold prices slid to $1,180 an ounce before rebounding into the first quarter. But considering that prices fell further after the reporting time window closed for the most recent CFTC report, analysts said it’s likely that gold’s net-long position has been reduced even more.
For rest of the metals complex, funds either reduced net-bullish positions or expanded on net-short positions.
Metals prices fell during the time period covered by the latest CFTC report. Comex December gold fell $10.40 to $1,211.60 an ounce. December silver slid 72.20 cents to $17.057. January platinum dropped $33.10 to $1,300.50 an ounce. December palladium fell $40.65 to $775.15. Comex December copper lost 2.75 cents to $3.0075 a pound.
Managed-money traders reduced their gold net-long position for the seventh straight week in this report, with their holdings now standing at 37,743 contracts, the smallest since Dec. 31. In the Sept. 30 CFTC report, the managed-money traders cut 3,030 longs and added 3,492 gross shorts. Producers’ net-short positions rose as they cut more gross longs than gross short positions. Swap dealers saw their net-short positions fall as they added gross longs and cut gross shorts.
The non-commercial traders in the gold legacy report reflected the activity in the disaggregated report. They cut 2,297 gross long contracts and added 1,376 gross shorts. They are now net-long 67,083 contracts, which is the smallest net-long position since Dec. 31. Commercials are net-short and trimmed that position by cutting more gross shorts than gross longs.
Although the CFTC data matches the low net-long position speculators had just before gold’s run-up into the first quarter, most gold analysts don’t expect a rebound in gold prices to occur, nor do they think the net-long positions will rise, either.
“Further liquidation is likely to be seen in the next few COT (Commitment of Traders) releases,” said analysts at Citi Research, saying the strength of the U.S. dollar will remain “a significant headwind for gold price appreciation in the coming quarters.”
The analysts said they’ve noticed some traders were buying short-dated gold calls as a hedge against dollar long positions, which stabilized gold. Normally call buying is bullish, but in this case, the Citi analysts said it’s unlikely to help gold prices. “This should not be considered any structural reprieve in our view, and investor flows flipped increasingly bearish to close the first week of October” in the CFTC data.
Looking at the legacy report data, Barclays’ analysts pointed out that non-commercial gross short positions are back above 100,000 lots, “at their highest level this year, underscoring the increasingly bearish sentiment towards gold.”
Managed-money traders extended their net-short in silver for the third week, lifting their bearish position to 6,073 contracts. This is still slightly less than the June 10 net-short position of 6,123 contracts. The large speculators added 2,665 gross longs and added 3,845 gross shorts. Producers increased their net-short positions by cutting more gross longs than gross shorts. Swap dealers reduced their net-short position by adding more gross longs than gross shorts.
In the legacy report, non-commercials added 2,907 gross longs but also added 5,063 gross shorts, lowering their net-long position to 2,836 contracts. This remains the smallest net-long since June 10 and is the 11th week of straight cuts to the net-long position. Commercials are net-short and decreased that position by adding more gross longs than gross shorts.
Managed-money accounts in platinum decreased their net-long position for the fourth straight week, to 13,265 contracts by cutting 2,645 gross longs and adding 1,905 gross shorts. Non-commercials in platinum lowered their net-long position to 23,878 contracts in the legacy report for the fifth week in a row, and did so by cutting 2,914 gross longs and adding 2,239 gross shorts.
Citi analysts said it’s likely that large speculators continued to cut net-long positions in platinum as prices are still eroding. “We believe the market is moving closer to the point of money-manager positioning being net-short…,” they said.
Large speculators’ net-long palladium holdings fell in the disaggregated report to 18,318 contracts, the fourth week of reductions to their net holdings, as they cut 673 gross longs and added 352 gross shorts. The palladium legacy report saw non-commercials cut 485 gross longs and add 935 gross shorts, lowering their net-long to 21,443 contracts.
Managed-money accounts increased their new net-short position in copper, building on the substantial bearish position established in the previous disaggregated report data. Their net-short position rose to 21,438 contracts as they added 254 gross longs but also added 9,388 gross shorts. Large speculators in copper’s legacy report expanded their net-short position, which now stands at 23,689 contracts. These traders added 904 gross longs but also added 4,597 gross shorts. This is the fifth straight week of rising net-short positions for large speculators in copper.
Commerzbank analysts said a rise in economic data released after the CFTC reporting window closed helped copper prices rebound, so the high net-short positions seen in the red metal may have been partially covered already. “At (about) 21,500 contracts, net-short positions found themselves at their highest level in six months. A month earlier, there had still been net-long positions on a similar scale, meaning that money managers contributed to the copper price slide in recent weeks,” Commerzbank said.