CFTC Shows Gold, Silver Long Positions Cut As Fed Prepares To Hike Rates
New York (Feb 9) As analysts were expecting, data from the U.S. Commodity Futures Trading Commission (CFTC) shows that money managers reduced their exposure to long gold and silver positions as of last week.
According to the Commitment of Traders disaggregate future report, as of Feb. 3, money-managed future gold speculative long positions fell by 5,800 contracts, bringing the total long gold future contracts to 167,310. At the same time, short speculative positions fell by 889 contracts to 18,984. The gold market’s net long position now stands at 148,326 contracts.
Analysts at Barlcays said that despite the decline in long positions, gold net length positions, as a percentage of open interest, is at 44%, the highest since October 2012.
During the report’s survey period, gold prices fell $31.70 or 2.45%. The drop also coincided with the Federal Reserves’ Open Market Committee Meeting. The data confirms most analysts’ assumptions that speculators started taking profits in gold and silver after deeming the central bank’s statement as hawkish, signaling that interest rates could start to move higher in the second half of the year.
April Comex futures are relatively neutral Monday, after a significant decline in Friday, following a stronger-than-expected January jobs report; analysts say the data helps to confirm the Fed is in a position to hike rates sooner, rather than later, in the year. As of 11:00 am EST, gold futures were trading at $1,240.90 an ounce, up $6.30 or 0.51% on the day.
Bart Melek, head of commodity strategy at TD Securities, said that with gold prices under the 200-day moving average he is expecting long positions to continue to be cut and a build of speculative short-positions.
Commodity analysts agreed that gold prices could be in for further declines as the correction seen during the latest survey period was only “modest” compared to the month-long gains.
“Gross shorts have cut back positions aggressively over the last three months – declining by 54% or 8.80moz – suggests there is now more room to rebuild positions as the market refocuses on Fed normalization,” they said.
For the silver market, the CFTC data shows that not only are investors getting out of their long positions, but they are starting to increase their short exposure. According to the data, money-managed future silver speculative long positions fell by 1,466 contracts to 47,942. At the same time, speculative short positions grew by 1,371 contracts to 9,057. Silver net long positions now stand at 38,885 contracts.
During the survey period, the silver price dropped 72.4 cents or 4%.
UBS analysts noted that the increase in silver short positions came after levels reached a seven-month low the previous week.
Comex March silver futures were slightly stronger Monday, following a strong selloff on Friday. As of 11:00 a.m. EST silver futures were trading at $17.055 an ounce up 36 cents or 2.16% on the day.
Source: KitcoNews
