Speculators Buy Up Precious, Base Metals Futures, Options – CFTC

NEW YORK (Aug 26)  Speculators returned as buyers in all precious and base metals futures and options traded on the Comex division of the New York Mercantile Exchange and the Nymex, according to U.S. government data, spurred in part by a rise in prices.

For the week ended Aug. 20, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report added to their gold and silver net-long positions for the third week in a row, while funds continue to amass bullish positions in platinum group metals. Speculators added to the newly established copper net-long position in the disaggregated report and are now nearly flat in the legacy report.

Metals prices rose during the week covered by the report. December Comex gold gained to $52.10 to $1,372.60 an ounce as of Aug. 20, while September silver rose $1.728 to $23.071. October platinum rallied $25.80 to $1,525.50 an ounce, while September palladium gained $10.75 to $749.65. Comex September copper climbed 2.1 cents to $3.3380 a pound.

Managed-money accounts covered shorts and added new long positions in gold futures and options for the disaggregated report, increasing their net-long position to 73,216 contracts. Managed-money accounts added 8,931 gross longs and cut 7,681 gross shorts, bringing their net-long position to the highest since February. Producers added to their net-short position, but did so by cutting many more gross longs than gross shorts, while swap dealers lifted their net-short position by cutting gross longs and adding gross shorts.

The situation was similar in the legacy report as non-commercials sharply increased their net-long position, having added 12,843 gross longs and cut 7,771 gross shorts. They are now net-long 102,897 contracts, the highest since mid-April. Commercials are net-short, having heavily cut gross longs and added a significant number of gross shorts.

Analysts said bullish traders should feel a bit more comfortable now that the CFTC data show new longs established as prices rose, rather than just short covering.

The short covering seen in gold pushed speculator gross short positions to their lowest since April, said Barclays, adding that additional short covering may now slow. What’s important going forward is whether new longs will continue to be attracted to gold.

Following the weaker-than-expected U.S. new home sales, it will be key to track if sentiment is changing toward gold, and fresh longs continue to build. This is the first increase in gross longs in four weeks and there have not been consecutive weeks of an increase since April,” they noted.

TD Securities said it was the absence of new longs that previously kept gold from moving above $1,400 an ounce. Now that there is “growing ambiguity surrounding the size and exact timing of the Fed’s QE taper (that) prompted specs to finally start building long positions, while continuing to reduce short exposure,” they said.

The silver net-long position for the managed-money accounts rose to 16,139 contracts. They reduced exposure in general to silver, but the net rise came from cutting more gross shorts, 5,693 contracts, than gross longs, 976. Producers are net-short and amplified that position by adding gross shorts and cutting gross longs. Swap dealers are net-long, but reduced their position by cutting gross longs and adding gross shorts.

In the legacy report, the silver net-long for non-commercials also rose, but in a different manner. They added 477 gross longs and cut 6,509 gross shorts, signifying the gain came from short covering and new buying. They are now net-long 22,823 contracts. Commercials are net-short and expanded exposure by adding more gross shorts than gross longs.