(Kitco News) – Large speculators scaled back their bullish positioning in gold and silver futures during the most recent weekly reporting period for data compiled by the Commodity Futures Trading Commission.
The report covers the week through Aug. 16. During this period, Comex December gold managed a $4.70 gain to $1,351.30 an ounce, while September silver slipped 8 cents to $19.79.
Net long or short positioning in the CFTC data reflect the difference between the total number of bullish and bearish contracts. Traders monitor the data to gauge the general mood of speculators, although excessively high or low numbers are viewed by many as signs of overbought or oversold markets that may be ripe for price corrections.
The commission issues two reports each Friday — a so-called “legacy” report and a “disaggregated” report, started in 2009 and meant to offer more detail.
The disaggregated Commitments of Traders report shows that money managers cut their total longs, or bullish, positions by 4,344 futures contracts to 277,152 lots. This more than offset the short covering, as reflected by a 1,819 decline in total short, or bearish, trades to 34,425. This left money managers net long by 242,727 contracts, down from 245,252 the week before.
“According to the most recent COTR, managed money again decreased their Comex gold positioning in the week up until 16 August, which was consistent with ETF (exchange-traded-fund) outflows, (with) the SPDR (Gold Shares ETF) seeing a further 4.5 tonnes worth of outflows last week,” according to a research note from MKS (Switzerland) S.A. “These trends continue to threaten gold’s upside.”
Still, MKS characterized gold as “resilient,” with the market holding within its recent trading range.
HSBC characterized the reduction in gold speculative net length as “modest” but suggested the decline in silver net length was greater on a relative basis. Money managers trimmed their gross silver longs by 2,574 lots to 98,767, according to the CFTC disaggregated report. They also added 2,451 shorts, bringing the total to 17,311. This left them net long by 81,456 contracts, compared to 86,481 the prior week.
“Silver specs turned a little more bearish last week, cutting back slightly on their heavy level of long contracts and seemingly shifted those positions rather to downside bets,” said TD Securities. “Recent public hawkish rhetoric from Fed members despite global yields falling even more negative seems to have kept precious metals range bound, but ultimately had some specs correctly expecting this would lead prices to trade to the lower end of the range.”
HSBC added that the remaining silver net length means “we could see some further liquidation near term, despite our generally positive view on silver prices longer term.” However, the bank pointed out that while bullish positioning in silver futures fell, holdings by exchange-traded funds rose 4.5 million ounces on the week.
By Allen Sykora of Kitco News; asykora@kitco.com
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