(Kitco News) - The change in speculative positioning for precious metals was mixed in the most recent reporting period for data compiled by the Commodity Futures Trading Commission, with traders adding to bullish gold and palladium positions, but cutting back on their bullish exposure to silver and platinum."
In both the disaggregated and legacy weekly commitment of traders reports issued by the Commodity Futures Trading Commission, the managed-money and larger trader speculative non-commercial accounts returned as buyers in gold and palladium after winnowing down positions in the previous report.
Meanwhile, speculators are keeping a tight leash on their net-long silver positions, which are the smallest since August in the legacy report and the lightest since May in the disaggregated. For the fourth consecutive week, speculators cut back on bullish platinum positions. Funds remain bearish on copper’s outlook and increased their net-short position. The data is for trade through March 12 and encompasses both the futures and options activity combined at the Comex division of the New York Mercantile Exchange.
All of the metals rallied during the week to March 12 covered by the report. April Comex gold rose $16.80 to $1,591.70 an ounce as of March 12. May silver gained 56.7 cents to $29.171. Nymex April platinum rose $9.30 to $1,595, while June palladium rallied $40.90 to $775.50. Comex May copper gained 3.95 cents to $3.5545 a pound.
Managed-money accounts are cautiously returning to the gold market, adding back a few long positions to their net-long total in the current report. Their net-long position now stands at 43,195. They added 4,930 gross longs and added 1,366 gross shorts.
Producers added gross longs and cut gross shorts, lowering their net-short position, while swap dealers cut gross longs and added many gross shorts, boosting their net short position.
In the legacy report, large speculators, known as non-commercials, increased gross longs by 6,440 contracts and eliminated 842 gross shorts, increasing their net-long position to 102,294 contracts. Commercial traders increased both gross longs and shorts, but significantly raised shorts, which bumped up their net-short position.
Barclays said the rise in speculative positioning is likely tied to gold’s first push toward $1,600 since late February.
Anne-Laure Tremblay, precious-metals strategist with BNP Paribas, said considering the economic uncertainty tied to Cyprus and with the political uncertainty with Italy, investors will likely return to gold and a further rise in the speculative net-long positions wouldn’t be a surprise.
“In particular, the rebound in net length gold exposure would equally be facilitated after several weeks of a decline in net non-commercial positions as a percentage of open interest,” Tremblay said.
Managed-money accounts reduced exposure to silver by cutting 392 gross longs and adding 686 gross shorts, thus lowering their net long position to 5,040 contracts. Producers cut both longs and shorts, trimming their net-short position. Swap dealers cut longs and added shorts, lowering their net-long positions.
The large-speculator category in the legacy report showed an increase in gross longs of 395 contracts, but the 863 new gross shorts overwhelmed the few new gross longs, meaning the net-long for silver fell to 16,556 contracts.
In the legacy report, commercials added to their net-short positions in silver, but did so by cutting more gross longs than gross shorts.
Tremblay said while gold might benefit from a rebound in speculative buying, silver might not. “Weak positioning as a percentage of open interest in silver is unlikely to see a similar rebound in buying interest if risk aversion were to remain high. We may see further erosion in the net length for silver but this is likely to remain relatively limited,” she said.
Activity by speculators was mixed in the platinum group metals. In the disaggregated report, managed-money accounts are now net-long 28,194 contracts in platinum, a reduction from the previous report as they cut gross longs and added shorts. In palladium, managed-money accounts added gross longs and cut gross shorts, lifting the net-long to 24,628 contracts.
In the legacy report for platinum, non-commercials added more short contracts than long contracts, lowering the net-long position for funds to 39,520. Palladium speculators in the legacy report hiked gross longs and trimmed a couple of gross short contracts, and are now net-long 27,649 contracts.
Tremblay cautioned investors about the rise in the palladium net-longs by speculators. If the worries in the eurozone fester, palladium could be hit. “Palladium would be most vulnerable to long liquidation in the context of risk aversion as positioning on the contract appears already stretched,” she said.
Large speculative accounts added to net-short positions in copper in the disaggregated and legacy report. Managed-money accounts whittled down some gross longs and added a handful of gross shorts, lifting their net-short position to 16,764 contracts. Speculators in the legacy report increased their net long position by cutting more gross longs than shorts, upping their net-short position to 6,119 contracts.
TD Securities said copper is being hammered as China economic data signals that “slower demand might lie ahead.”
For further information, see the CFTC website at: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm
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By Debbie Carlson of Kitco News dcarlson@kitco.com
