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Hedge Fund Gold Buying Pushes Speculative Interest To 11-Week High

Discussion in 'Gold Silver (All things Metal)' started by Scorpio, Feb 28, 2017.



  1. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    Hedge Fund Gold Buying Pushes Speculative Interest To 11-Week High

    Neils Christensen

    Monday February 27, 2017 12:37

    Kitco News

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    (Kitco News) - Geopolitical concerns in Europe and the U.S. have prompted hedge funds to jump back into the gold market according to the latest trade data from the Commodity futures trading commission.

    [​IMG]

    However, bullish speculative positioning remains at relatively tame levels, leaving room for further gains, according to some analyst.

    The disaggregated Commitments of Traders report, for the week ending Feb. 21, showed money managers increased their speculative gross long positions in Comex gold futures by 6,900 contracts to 142,639. At the same time, short bets fell by 7,517 contracts to 64,597. Gold’s net length now stands at 78,042 contracts, an increase of 22% from the previous week. Despite the renewed buying interest, gold’s net length is still down more than 71% from its highs seen in July

    “In a sharp reversal from the previous week, concerns surrounding the Trump fiscal agenda, a dropping USD, lower rates and concerns surrounding European elections convinced specs to materially grow gold length,” said Bart Melek, head of commodity strategy at TD Securities.

    Commodity analysts at Commerzbank noted that gold’s bullish positioning is now at its highest levels in 11 weeks, but added, “It does not constitute an unusually high level.”

    The increases interest in gold had a modest impact on prices. During the survey period gold rallied more than 1% as prices continued to hold near their highest levels in three months..

    Ole Hansen, head of commodity strategy at Saxo Bank agreed that despite gold’s rally since the start of the year, the trade data shows that hedge funds have missed most of the early rally. He added that there is potential for gold prices to continue to rally as funds now start to jump in.

    “While gold has recovered more than 50% of the July-December selloff, the net long has recovered by less than 20%. This highlights how funds have struggled to find a strong enough reason to get back into gold amid worries of rising dollar and bond yields. With both of these risks now fading, we are seeing underlying support from funds playing catch-up,” he said.

    Although funds have had a an inconsistent interest in gold so far this year, they remain extremely bullish in silver as net bullish positioning increased for the eighth consecutive week, according to the latest trade data.

    The disaggregated report showed money-managed speculative gross long positions in Comex silver futures rose by 5,6701contracts to 89,710. At the same time, short positions rose 404 contracts to 12,278. Silver’s net length now stands at 77,432 contracts, up 7% from the previous week.

    Analysts at Commezbank noted that silver’s net length is at its highest level since September and is down 19% from its all-time highs.

    Despite the continued growth in investor interest, the market did not see a significant rise in prices. Silver prices rose 0.6% during the survey period, as prices held near their three-month highs.

    Melek said that the silver market will continue to benefit from growing industrial demand as global manufacturing is expected to increase throughout the year.

    By Neils Christensen

    For Kitco News

    [​IMG] nchristensen@kitco.com

    Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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