(Kitco News) - A price rebound for metals across the board encouraged speculators to start to rebuild bullish positions in both precious and base metals futures and options, according to U.S. government data released Friday.
All metals contracts traded on the Comex division of the New York Mercantile Exchange and the Nymex saw net long positions for speculators rise in both the legacy and disaggregated weekly commitment of traders reports. These were released by the U.S. Commodity Futures Trading Commission for the week ended Jan. 17. Speculator’s positions in copper also turned to net long from net short for the first time late last year.
During the timeframe measured, the most-active February gold futures contract on Comex gained $24.10 an ounce and settled at $1,655.60 on Jan. 17. Comex March silver rose 32 cents an ounce to settle at $30.135. April Nymex platinum gained $64.10 an ounce to settle at $1,528.70 and March Nymex palladium rose $20.30 an ounce to settle at $655.50. Comex March copper rallied 21.65 cents a pound to $3.7295.
Anne-Laure Tremblay, precious metals strategist at BNP Paribas, said the solid price gains for the PGMs came on the back of news that the South African electricity provider, Eskom, warned of higher risks of power outages.
Tremblay also noted that open interest in gold and platinum futures rose during the week, while it fell for silver and palladium. She said looking ahead to next week “we expect further additions to long positions across the precious metals part driven by stronger risk appetite following positive auctions in the European debt market.”
Managed money accounts increased their net long position in gold, adding 3,285 gross longs and cutting 3,193 gross shorts, raising the net long position to 116,978 contracts. Producers increased exposure to both sides, but added many more gross shorts than longs, lifting their net short position. Swap dealers decreased their net short position by cutting more gross shorts than longs.
Analysts at Citi Futures Perspective said the managed money accounts holdings are still “modest” by recent standards. “There’s potential for a more substantial round of buying here, but the flow looks tentative so far while the position is still below a declining 10-week average,” the firm said.
Non-commercials in the gold legacy report added 3,770 gross longs and trimmed 2,801 gross shorts, raising the net long position to 146,008 contracts. Commercials added to both sides, particular from the short side, which hiked their net short position.
In the silver disaggregated report, speculators increased gross longs by 337 contracts and sliced gross shorts by 1,171 contracts, raising their net-long to 13,139 contracts. Producers cut gross longs and added gross shorts, raising their net short position, while swap dealers lifted their net long position by adding a few gross long and cutting a couple of gross shorts contracts.
In the legacy report, non-commercial traders added 272 gross longs and cut 1,854 gross shorts, lifting the net-long position to 16,665 contracts. Commercials raised their net-short by adding more gross shorts than gross longs.
Although net long positions are the highest in a month, analysts at Barclays Capital said this position is still “subdued.”
In the platinum group metals, funds increased their net long positions in both platinum and palladium by adding to gross longs and cutting gross shorts. In platinum, managed-money accounts lifted their net-long to 14,122 contracts. In palladium, managed-money accounts increased their net-long to 3,651 contracts.
In the legacy report, the non-commercial platinum trader lifted the net long position to 21,491 contracts. Similar action was seen in palladium as the non-commercial traders’ net-long position rose to 5,210 contracts. Commercials raised their net short positions in both PGMs in the legacy report.
Funds flipped to being net long in copper from being net short. In the disaggregated report speculators were net short since Sept. 20. The move to a net long position came from adding gross longs and cutting gross shorts, which pushed them to be net long by 4,775 contracts. In the legacy report, the non-commercial trader was net short in copper since Nov. 15. Speculators added to gross longs and cut gross shorts making them net long 2,223 contracts. Commercial traders cut gross longs and added to gross shorts, lowering their net long status.
Citi said there is considerable room for longs to add to positions. Between gold, silver and copper, the red metal “looks like the one with the more robust buying interest relative to the overall size of the market,” the firm said.
For a more detailed breakdown, please visit the CFTC website: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm
By Debbie Carlson of Kitco News dcarlson@kitco.com
