CFTC: Speculators Boost Gold, Silver, Platinum Exposure

September 9, 2013

SAN FRANCISCO (Sept 9)   Speculators continued to cut back on bearish gold bets and build their bullish gold positions as prices neared $1,400 an ounce, according to U.S. government data released Friday.

Speculators also added to bullish silver and platinum positions in both the legacy and disaggregated weekly Commitment of Traders reports released by the U.S. Commodity Futures Trading Commission for the week ended Sept. 3. Palladium saw traders’ trim their net-long position, while funds also became a little more wary in copper.

Metals prices were mostly lower during the week covered by the report. December Comex gold fell $8.20 an ounce to $1,412 as of Sept. 3, while December silver slid 27.1 cents to $24.429. October platinum bucked the trend and rallied $6.10 to $1,538.20, while December palladium lost $33.30 to $717.95. Comex December copper fell 3.1 cents to $3.3045 a pound.

Managed-money accounts increased their net-long position in gold, adding 744 gross longs and cutting 2,751 gross shorts, boosting the net-long position to 101,396 contracts. This was the first time the net-long position has been over the 100,000 level since Dec. 31. Producers and swap dealers both added exposure to gold by accumulating gross longs and shorts, but added many more gross shorts than longs, lifting their respective net-short positions.

Non-commercials in the gold legacy report added 361 gross longs and clipped 1,085 gross shorts, raising the net-long position to 127,663 contracts, the highest since late March. Commercials added to both sides, and increased their net-short position.

HSBC noted that this is the eighth week in a row that speculators covered short positions. Still, they said, gold gross speculative short positions “are still at historically high levels and leave ample room for further short covering, in our view,” the bank said.

That view is not universal as others are wary of how much more room gold has to run on short covering. Barclays said considering that gross longs are only at a four-week high, “it does not appear that short-term sentiment toward gold is becoming positive quickly, and given that gross short positions remain close to their March lows, the scope for additional significant unwinding of bearish positions looks to be drawing to a close.”

Commerzbank is also unsure of the sustainability of the recent gains in price – even though the gold price fell slightly in the timeframe covered by the report. “This makes the gold price susceptible to profit-taking unless the $1,400 per troy ounce mark is crossed in the near future,” they added.

TD Securities suggested that the relatively modest activity in gold by speculators might have signaled some caution. “A growing sense the Fed will start to taper soon, along with a price spike in the previous week, prevented specs from building significant new long position and persuaded them to cover their short exposure,” they said.

Speculators increased their net-long position in silver in the disaggregated report. They increased gross longs by 991 contracts and decreased gross shorts by 1,915 contracts, raising the net-long to 19,375 contracts. Producers reduced their net-short by cutting more gross shorts than longs. Swap dealers reduced their net-long position, having added gross shorts and cut gross longs.

In the silver legacy report, non-commercial traders added 1,562 gross longs and cut 1,549 gross shorts, lifting the net-long position to 24,830 contracts. Commercials increased their net-short by cutting more gross longs than gross shorts.

Funds added 36 gross longs and trimmed 408 gross shorts in platinum, lifting the net-long position for managed-money accounts to 34,708 contracts. Non-commercials in the legacy report cut 153 gross longs and 360 gross shorts, raising the net-long position to 39,995 contracts.

TDS said speculators continued to hold platinum longs, based on South African supply concerns and European demand hopes.

Managed-money trimmed their net-long positions in palladium by cutting 1,379 gross longs and adding 378 shorts. This lowered the net-long to 22,719 contracts. In the legacy report, the non-commercials cut 1,593 gross longs and added 649 gross shorts, lowering the net-long position to 23,562 contracts.

In palladium, TDS noted that the metal saw its price momentum wane at the highs. Also they suggested that as Syrian war concerns flared, “specs took the opportunity to exit very bullish longs positions while adding some shorts.”

Managed-money accounts in copper trimmed their net-long position for the second week in a row in the disaggregated report. Funds withdrew 2,192 gross long contracts and added 2,639 gross shorts, making them net-long 8,211 contracts. In the legacy report the non-commercial trader hiked the net-short position. They cut 1,923 gross longs and added 1,727 gross shorts, lifting the net-short position to 4,473 contracts.

Commerzbank said money managers are likely watching the economic data out of China, and the recent spate of positive news could mean that funds might return as copper buyers after scaling back long positions in the past two weeks.

“After all, at 8.2 thousand contracts, net-long positions are rather low by historical standards. Positive Chinese industrial production figures, due to be published tomorrow, could prompt investors to increase their positioning,” they said.

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