Latest COT Data Shows Gold Shorts Running For The Exits - Does Gold Have Another Bullish Week Coming?

August 13, 2017

Summary

  • The big move for speculative traders last week came from shorts covering not longs adding to positions.
  • The reason why was the escalating tensions between the US and North Korea as evidenced by the charts.
  • COT positions now are overbought for gold and silver, but are only at historically average positions.
  • Geopolitical issues continue to drive PM's higher despite some worrisome selling seen in gold and silver ETFs.
  • We remain bearish only on the short-term but there are certainly strong reasons to be bullish too.

The latest Commitment of Traders ((NYSE:COT)) report, showed another rise in speculative longs for the week, though it was a bit subdued. The big change in gold speculative positions came on the short side as speculative shorts lowered their own positions to around 29,000 contracts outstanding – the lowest levels of speculative gold shorts since last September when gold was well over $1300.

Silver, the best performing precious metal on the week, also saw a similar drop in short interest as longs essentially stayed put.

Precious metals started the week weak (they were actually lower through the COT week) until Tuesday when President Trump threatened North Korea with 'fire and fury' if it threatened the U.S. That caused precious metals to spike (and stocks to drop) and led to the strong finish:

We will get more into some of these details but before that let us give investors a quick overview into the COT report for those who are not familiar with it.

About The COT Report
The COT report isissued by the CFTC every Friday, to provide market participants a breakdown of each Tuesday's open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. In plain English, this is a report that shows what positions major traders are taking in a number of financial and commodity markets.

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