A rise in gold prices enticed speculators back to the gold futures and options markets, but the industrial metals were left out of the shopping trip as funds cut bullish positions in those markets on the Comex division of the New York Mercantile Exchange and on the Nymex, according to U.S. government data released Friday.
For the week ended March 27, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report increased their net-long positions in gold, but cut back in silver, the platinum group metals and copper, with palladium taking the brunt of the reduction. This was seen in both the disaggregated and legacy reports.
Prices were mostly up in the New York metals market during the week-long period covered by the most recent CFTC report. Through March 27, April gold rose $38.30 an ounce to settle at $1,687.70. May silver gained 78.2 cents an ounce to $32.616, June palladium lost $34.05 to $663, July platinum rose $3.20 to $1,662.10 an ounce. May copper gained 4.95 cents to $3.88 per pound.
Managed-money accounts returned as buyers, lifting their net-long position to 130,472 contracts. Managed-money accounts added 12,035 gross longs and cut 5,154 gross shorts. Producers cut more gross longs than shorts, increasing their net-short position, while swap dealers cut gross longs and added gross shorts, upping their net-short position.
Non-commercials in the legacy report also increased their net-long position, adding 15,512 gross longs and cutting 6,381 gross shorts. They are now net-long 160,051 contracts. Commercials are net short, having heavily cut gross longs but trimming significantly fewer gross shorts, increasing their net short position.
TD Securities said the price gains gold witnessed, particularly on Monday, led to gold speculators increasing longs. However, the bump up might be temporary. “Gold’s sharp move lower on Wednesday likely saw some gains in net position reduced,” the firm said.
This was the first time in four weeks gold saw the return of speculative buying, Commerzbank said.
“These short-term-oriented money managers are thus likely to have been mainly responsible for the rise in the price of gold to nearly $1,700 a troy ounce in the period under review. That said, the positive sentiment may soon give way to pessimism again, for the strike by Indian gold jewellers is already in its 17th day,” the bank said.
Silver net-long positions for the managed-money accounts shrunk, slipping to 17,031 contracts. The drop came from slicing 1,338 gross longs and adding 1,946 gross shorts. Producers remain net-short, but cut back on exposure as gross longs rose and gross shorts fell. Swap dealers are net long and increased their position slightly by adding gross longs and cutting gross shorts.
In the legacy report, the silver net-long for non-commercials fell. They cut 2,178 gross longs and added 1,115 gross shorts. They are now net long 21,916 contracts. Commercials narrowed their net-short position by cutting gross short positions and adding a few gross longs.
Managed-money accounts in the platinum group metals saw their net long position dwindle as they added to shorts and cut longs. For platinum, speculators are net long 15,464 contracts and in palladium they are net long 7,785 contracts.
In the legacy report, in platinum, non-commercial accounts are now net-long 22,856 contracts, and in palladium they are net long 9,373 contracts. Here, too, they cut to gross longs and added to gross shorts for both metals.
Anne-Laure Tremblay, precious metals strategist at BNP Paribas said of the two metals, palladium was hit harder. “The extent of the correction can hardly be justified by palladium’s fundamentals, in our view, particularly given the more upbeat assessment of the economy. However, investor sentiment has yet to turn positive on the metal’s near-term prospects,” she said.
Commerzbank said the drop in speculative long positions explains the poor price performance of palladium.
The copper net-long position for the managed-money accounts dropped to 14,883 contracts, as they cut more gross longs than gross shorts. Funds lowered their net long position in the legacy report in the same fashion, having trimmed more gross longs than gross shorts. They are net-long 7,956 contracts.
Barclays Capital said the decline, which came from both sides of the funds position, “illustrates the lack of conviction in either direction among copper market participants.”
For further information, see the CFTC’s website: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm
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