(Kitco News) - A rise in price prompted large speculators to add to their bullish futures and options positions in gold at the Comex division of the New York Mercantile Exchange, as seen in the latest weekly commitments of traders data from the Commodity Futures Trading Commission, released Friday.
Large speculators also increased their net-long positions in silver and platinum; however, the rise came because of short covering, which is the buying back of previously sold positions. The data is as of Jan. 7.
Speculators added to their palladium net-longs, but their activity between the legacy and disaggregated reports were mixed in copper.
During the week covered by the report, February gold rose $27.40 to $1,229.60 an ounce, while March silver gained 41.7 cents to $19.787. April platinum rose by $41.60 to $1,415.40, while March palladium gained $23.40 to $741.70. Only Comex March copper fell by 3.7 cents to $3.3595 a pound.
Managed-money accounts increased their gold futures and options net-long position for the second week, to 40,229 contracts by adding 2,261 gross longs and cutting 3,863 gross shorts, meaning new bullish positions were added and bearish ones cut. Producers’ net-long position fell as they added more gross short positions than gross longs. Swap dealers increased their net-short position as they cut gross longs and added gross shorts.
Large speculators’ activity in the gold legacy report mirrored the disaggregated report as they lifted their net-long position by adding 3,818 gross longs and cutting 4,344 gross shorts. They are now net-long 66,478 contracts. Commercials are net-short. Their position rose by cutting gross longs and adding gross shorts.
TD Securities said speculators were likely adding new gold longs and cutting shorts ahead of the annual commodity index rebalancing, which officially started Jan. 8, the day after the reporting window closed for the CFTC data.
Barclays said the speculators’ gross long gold positions are at their highest since November, but said following Friday’s weaker-than-expected U.S. nonfarm payrolls report, “there remains scope for additional short covering.”
Managed-money accounts lifted their net long in silver, but did so by short covering. They are net long 7,260 contracts. They cut 1,672 gross longs and cut 3,360 gross shorts, which meant they reduced exposure in general. Producers raised their net-short position, but did so by cutting more gross longs than gross shorts. Swap dealers reduced their net-long position by cutting gross longs and adding a few gross shorts.
In the legacy report, the silver net-long for non-commercials also rose on short covering. Funds cut 1,043 gross longs and cut 3,744 gross shorts to lift the net-long to 17,768 contracts. Commercials are net-short and built on that position by adding gross shorts and cutting gross longs.
Related stories
- Short Covering Boosts Speculators' Net-Long Positions In Gold, Silver, Platinum - CFTC Data
- South African Electricity Could Become Bullish Factor For Platinum
- Technical Trading: Minor Daily Uptrend Pattern Intact For Gold
Short covering was seen in both reports for platinum. Managed-money accounts increased their net-long position to 19,312 contracts by cutting 390 gross longs and cutting 5,014 gross shorts. Non-commercials in platinum boosted their net-long position to 27,830 contracts, having cut 818 gross longs and 5,571 gross shorts.
Edel Tully, strategist at UBS, said the drop in gross shorts equaled 26%, which was the largest weekly percentage fall since January 2013.
TDS said improved sentiment toward precious metals to start 2014, along with “decent” European auto sales, pushed prices through the 50-day moving average and prompted speculators to cover shorts.
In palladium the managed-money accounts boosted their net-long position to 17,426 contracts, but did so by adding 883 gross longs and cutting 882 gross shorts. In the legacy report, non-commercials added 896 gross longs and cut 1,444 gross shorts, raising their net-long to 19,716 contracts.
Tully said speculative positioning in palladium is at 68% of the all-time high, versus 51% for platinum.
Speculators’ activity in copper was mixed in the two reports. In the disaggregated report, managed-money accounts are net-long 35,030 contracts, a reduction from the previous week after they cut three gross longs and added 603 gross shorts. Funds hiked their now net-long copper positions to 12,519 contracts in the legacy report, having added 1,570 gross longs and cut 499 gross shorts.
For further information, see the CFTC’s website.
Follow me on Twitter! If you want to keep up with metals news and features, then follow me on Twitter. It's free, too. My account is @dcarlsonkitco .
By Debbie Carlson dcarlson@kitco.com
