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Speculators Squaring Gold Trades Ahead Of FOMC -- CFTC Data

This article is more than 9 years old.

(Kitco News) - Hedge Funds and money managers squared their books ahead of the holidays and an uncertain Federal Open Market Committee meeting, according to the latest trade data from the U.S. Commodity Futures Trading Commission.

The latest disaggregated commitment of traders’ reports for the week ending Tuesday, Dec. 16, showed that managed money accounts liquidated 3,539 gold futures and options contracts, dropping long positions to 139,547 contracts. The data also showed there was modest short covering as traders bought, to close out their short positions, 2,746 contracts; for February gold, money managers and hedge funds still have 35,809 short contracts.

The net long position for gold now stands at 103,738 contracts.

Comex February gold prices dropped almost $37 during the week covered by the report and closed below the key psychological area of $1,200 on Dec. 16.

The silver market was significantly more negative compared to gold futures as money managers added to their short positions. According to the data, managed money accounts liquidated 1,067 contracts, dropping March silver long positions to 38,467 contracts. On the short side, money managers added to their short trades by 3,898 contracts, boosting short positions to 23,482.

Silver prices were just as disappointing, losing $1.373 during the week covered by the report. The Comex March Silver price ended Dec. 16 at $15.752.

Silver futures managed to hold on a net long position by 14,985 contracts.

“Silversaw prices take a hit on its industrial demand characteristic…,” said Bart Melek, head of commodity strategist at TD Securities, in a report published Friday.

Analysts at Bank of America noted that the decline in Silver’s net long position is a bearish signal that could lead to further losses in the new year.

Analysts were expecting to see some squaring last week ahead of the FOMC meeting, as markets were split fairly evenly on whether or not the central bank would update its forward guidance and remove the phrase “for a considerable time.”

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By Neils Christensen of Kitco News; nchristensen@kitco.com