(Kitco) Mon. April 1st, 2019 – Large speculators added to their bullish positioning in gold futures during the most recent reporting week for data compiled by the Commodity Futures Trading Commission, encouraged by dovish communications from the Federal Reserve, analysts said.
During the week-long period to March 26 covered by the report, Comex June gold rose $8.70 to $1,321.40 an ounce, while May silver climbed 5.7 cents to $15.429.
Net long or short positioning in the CFTC data reflect the difference between the total number of bullish (long) and bearish (short) 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.
Analysts with Commerzbank pointed out that the net-bullish position of fund managers nearly doubled during the most recent reporting week for CFTC data, although prices have fallen since the March 26 cutoff for the report. The price decline is normally seen as an indicator that the next round of data will show a decline in net length, barring a sharp rally before the end of Tuesday.
Money managers’ collective net-long position in the disaggregated report rose to 57,987 gold-futures contracts as of March 26 from 30,475 the week before. There was both short covering (as reflected by a 16,048-lot decline in gross shorts) and fresh buying (as reflected by an 11,464 rise in total longs).
“As [Federal Reserve Chair Jerome] Powell sounded an ultra-dovish tone at [the most recent] Fed meeting, money managers aggressively covered their precious-metals shorts, rushing for the exits in anticipation that the Fed’s next move may be a cut,” said a research note from TD Securities.
In the case of silver, money managers’ net-long position rose to 12,306 futures contracts from 9,716 the week before. The bulk of this was short covering, as gross shorts fell by 2,155 lots, although there was also a buildup of 435 total longs.
COMMENTARY
As reports like this are printed, it’s important to realize our readers are not all currency traders or economists. What the gist of this report is saying is that traders are NOW trying to own gold not sell gold. This is shown by INCREASING the ,”longs” which means futures contracts on gold are being bought and are turning bullish, or positive, as traders are buying the metal. In addition, this requires any, “shorts” or futures contracts on gold that were being sold to be reversed, or , “ covered” and DECREASED as the expectation now is for gold to gain in price based on a dovish stance now by the U.S. Federal Reserve . Longs and shorts are option trading buzzwords for buying and selling, respectively.
Posted by :
Jack Dempsey, President
401 Gold Consultants LLC
jdemp2003@gmail.com