Speculators Cut Bullish Gold Futures, Options Positions -- CFTC
NEW YORK (Sept 16) After speculators built bullish positions in gold futures and options traded the Comex division of the New York Mercantile Exchange for the past few weeks, they cut back on net-long positions in the latest data about their activity.
For the week ended Sept. 10, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report reduced their net-long positions in gold in both the legacy and disaggregated reports. Market watchers said speculators likely became more cautious on expectations the Federal Reserve would start reducing its bond-buying purchases. The Federal Open Market Committee meeting is Tuesday and Wednesday.
Speculators weren’t satisfied with trimming just gold positions as they cut back on net-long positions in silver and the platinum group metals. In copper they reduced the net-long in the disaggregated report and raised the net-short in the legacy report.
Metals prices were lower during the week covered by the report. December Comex gold fell $48 an ounce to $1,364 as of Sept. 10, while December silver slid $1.413 to $23.016. October platinum dropped $64.10 to $1,474.10, while December palladium lost $25.30 to $692.65. Comex December copper fell 4.2 cents to $3.2625 a pound.
Managed-money accounts erased much of the buildup in their gold net-long position seen during August and early September. Their net-long position now stands at 84,929 contracts, the lowest level since mid-August. Managed-money accounts cut 13,593 gross longs and added 2,873 gross shorts. That means not only are speculators getting out of bullish positions, they’re putting on bearish positions. Producers and swap dealers remain net-short, but they also reduced those positions by cutting a significant number of gross shorts and adding gross longs.
Non-commercials in the legacy report also cut their net-long position. In this report they hacked 18,020 gross longs and also cut 1,022 gross shorts. They are now net-long 110,665 contracts, which is also the smallest position since mid-August. Commercials are net-short, but sharply reduced gross shorts while adding gross longs.
TD Securities said gold speculative traders likely decided to sell some of their long holdings based on “increasingly hawkish FOMC market chatter and price projection downgrades by key players.”
HSBC noted the reduction pushed speculators’ gross long positions to levels not seen since December 2008. “This indicates that some investors are exiting out of their gold positions in preference for the sidelines ahead of the FOMC meeting,” they said.
Barclays said the number of gross shorts speculators are holding is near levels reached in the first quarter. That implies a “reduced scope for short covering, but positioning has been lightened ahead of the FOMC meeting, leaving room for sharp moves in either direction. Given our view on tapering, we believe there is room for short positions to be established and expose prices to the downside,” they said.
Silver net-long positions for the managed-money accounts fell, decreasing to 16,605 contracts. The reduction came from cutting 1,808 gross longs and adding 962 gross shorts. Producers are net-short, lowering that position by cutting more gross shorts than gross longs. Swap dealers are net-long, but boosted that position by adding gross longs and cutting gross shorts.
In the legacy report, the silver net-long for non-commercials also decreased. They cut 2,671 gross longs and added 571 gross shorts. They are now net-long 21,588 contracts. Commercials are net-short, but decreased exposure by cutting more gross shorts than gross longs.
Silver also felt the bite of speculators who wanted to lighten up on their long positions on quantitative-easing worries, TDS said, in addition to worries about sluggish emerging-market industrial demand.
After speculators continually raised net-long positions in platinum since mid-summer, these traders finally trimmed exposure; additionally, this is the third straight week of funds curbing their palladium net-long position.
Managed-money accounts in platinum are now net-long 32,502 contracts, having cut gross longs and added a few gross shorts. This drop ended the eight-week consecutive build in the fund net-long position. Non-commercials also decreased their net-long position, which now is at 38,752 contracts. They cut many more gross longs than gross shorts, ending the consecutive build in net-longs at nine weeks.
TDS said the end to platinum’s net-long build likely came as South African miners and labor generally came to an agreement on wage negotiations. Although the talks mostly surrounded gold miners, PGMs were affected, too.
