The disaggregated Commitment of Traders Report (COTR), for the week ending April 28, showed money-managed speculative long positions of Comex gold futures rose, ending two weeks of declines. Gross long positions rose by 6,693 contracts to 114,952. At the same time, short-sellers jumped into the marketplace, increasing their short bets by 4,235 contracts to 64,369. Gold’s net length now stands at 50,583 contracts.
During the survey period, the gold market was fairly volatile, falling to a low of $1,174.10 an ounce and then rising to 1,214.60. Despite the volatility, gold prices showed a gain of more than 3% during the survey period.
However, analysts note that the latest selloff, which pushed gold prices to a six-week low on Friday, is not reflected in the data. Bart Melek, head of commodity strategy at TD Securities, said the activity in the gold market reflects the current tug of war in interest rate expectations.
“Gold specs took on long and short positions, with disappointing U.S. data comforting the bulls, while the bears continue to expect rate hikes right around the corner,” he said.
With the market relatively neutral, analysts at Barclays said the short-term outlook for gold is becoming “divided.”
“Current levels suggest that positioning could equally lend itself to short covering or long liquidation,” they said.
Jonathan Butler, precious metals strategist at Mitsubishi, said that the neutral gold market is an indication that investors were sitting on the sidelines ahead of the Federal Open Market Committee (FOMC) monetary policy decision, which was released after the survey period.
The CFTC data for the silver market showed a much clearer trend as short sellers more than doubled the amount of investors. The disaggregated COTR showed money-managed speculative gross long positions of Comex silver futures rose by 1,798 contracts to 44,235. At the same time short contracts rose by 5,441 contracts to 37,724. Silver’s net length now stands at 6,511 contracts.
The increase in short-positions did not have a major impact on the price; during the survey period May silver futures rose to a high of $16.660 an ounce, its highest price since April 8.
Melek said that silver is attracting more short sellers because the U.S. economic data has been weaker than expected. A slowing U.S. economy would reduce industrial demand for silver.