(Kitco News) - Speculators returned as buyers in all precious and base metals futures and options traded on the Comex division of the New York Mercantile Exchange and the Nymex, according to U.S. government data, spurred in part by a rise in prices.
For the week ended Feb. 5, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report pushed their net-long positions in the platinum group metals to even higher highs. Funds also bolstered their net-long positions in copper on hopes of a strong economic outlook. There were increases in speculators’ net-long positions in gold and silver, although the gains were relatively modest in silver.
Prices were firmer across the board during the timeframe measured. In the week to Feb. 5, Comex April gold rose $10.80 to $1,673.50 an ounce, while March silver gained 69.10 cents to $31.875 an ounce. Nymex April platinum rose $28.30 to $1,707.20 an ounce during the week, while March palladium rose $15.70 to $765.45. March copper gained 7.85 cents to $3.7700 a pound.
After slashing positions in the previous report, managed-money accounts lightly boosted exposure to gold futures and options in the disaggregated report, increasing their net-long position to 86,926 contracts. Managed-money accounts added 4,807 gross longs and cut 38 gross shorts. Producers added to their net-short position by cutting more gross longs than gross shorts, while swap dealers lifted their net-short position by cutting gross longs and adding gross shorts.
Market watchers said the modest increase in the speculative net-long in this report likely reflects the see-saw action gold has exhibited lately, meaning that participants are likely not keen to put on big positions in a market that shows no solid direction.
The situation was different in the legacy report as non-commercials sharply increased their net-long position, having added 13,623 gross longs and 198 gross shorts. They are now net-long 144,495 contracts. Despite the jump in the net-long position, it does not make up for the heavy drop seen in the previous week’s report. Commercials are net-short, having heavily cut gross longs and just a handful of gross shorts.
Barclays noted that “fund length as a percentage of open interest has risen to 32% but gross short positions are at their highest since July 2012, posing the potential for a short-covering rally, should macro data worsen.”
The silver net-long position for the managed-money accounts rose modestly to 29,628 contracts. They reduced exposure in general to silver, but rise came from cutting more gross shorts, 1,510 contracts, than gross longs, 1,461. Producers are net-short and amplified that position by adding more gross shorts than gross longs. Swap dealers are also net-short, but reduced their position by cutting more gross longs than gross shorts.
In the legacy report, the silver net-long for non-commercials also rose slightly, in similar fashion. They cut 1,526 gross longs and cut 1,970 gross shorts, signifying the gain came mostly from short covering. They are now net-long 37,365 contracts. Commercials are net-short, and expanded exposure by adding more gross shorts than gross longs.
Again, speculators in both disaggregated and legacy reports in the platinum group metals further extended the net-long positioning, setting fresh records.
Managed-money accounts in platinum increased their net-long position to 42,530 contracts, having added 1,898 gross longs and 305 gross shorts. Non-commercials also augmented their net-long position, which now is 52,026 contracts, having added 3,090 gross longs and 1,026 gross shorts.
In palladium, the managed-money accounts raised the net-long position to 22,824 contracts. They added 814 gross longs and 522 gross shorts to increase the net-long position. In the legacy report, non-commercials added 1,442 gross longs and 416, lifting their net-long to 25,734 contracts.
“Net long positions in silver, platinum and palladium were also increased slightly further, which expresses how optimistic market players currently are about the more cyclical precious metals in particular, which are predominantly used in industry,” Commerzbank said.
Anne-Laure Tremblay, precious metals strategist at BNP Paribas, said while risk appetite is driving PGMs, she said investors need to stay vigilant with positioning at record highs. Several other market watchers have said recently PGMs could be vulnerable to sharp sell-offs if bullish sentiment changes.
The copper net-long position for the managed-money accounts rose significantly, to 22,650 contracts, as they added 9,691 gross longs and 1,489 gross shorts. The rise of net longs was more pronounced in the legacy report. Funds bolstered their net-long position, adding 11,213 gross longs and 4,390 gross shorts. They are net-long 16,187 contracts.
The sharp gains seen in net-long positioning in copper was reflected in the rise in prices, said Commerzbank. “Thus money managers have contributed to the 2% increase in the price of copper seen during the period under review, evidently inspired by positive economic data both from China and the U.S. at the beginning of the month,” they said.
For further information, see the CFTC’s website: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm
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By Debbie Carlson of Kitco News dcarlson@kitco.com
