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Hedge funds bullish on gold but reluctant chasing the price above $1,800

The latest trade data from the Commodity Futures Trading Commission (CFTC) showed that for the third week in a row hedge funds continued to add to their bullish bets; however, analysts note that momentum is weakening as speculators are reluctant to chase the market at current levels.

The CFTC’s disaggregated Commitments of Traders report for the week ending June 30 showed money managers increasing their speculative gross long positions in Comex gold futures by 11,933 contracts to 173,526. At the same time, short bets rose by 2,893 contracts to 34,971. Gold‘s net-long positioning currently stands at 138,555 contracts, up nearly 7% compared to the previous week.

The rise in gold’s net length is the lowest in the last three weeks. However, the momentum was enough to push gold prices above $1,800 — the highest level since 2011.

Although bullish bets increased last week, analysts at MKS PAMPs group said that there are enough headwinds in the marketplace to keep gold below $1,800 an ounce. However, they also see gold trading in a fairly narrow range with strong support at $1,770 an ounce.

Analysts at Commerzbank said that although speculative momentum is starting to weaken, it is nowhere near overbought levels.

“The current level of 138,600 contracts is not yet alarmingly high because the rise started out from a low level,” they said.

Despite the slowing momentum, Ole Hansen, head of commodity strategy at Saxo Bank, also sees plenty potential for the gold market as speculative bullish bets are still well below the peak seen in February.

While the gold market appears to be losing some momentum, interest is picking up in the silver market.

The disaggregated report showed money-managed speculative gross long positions in Comex silver futures rose by 8,636 contracts to 59,931. At the same time, short positions increased by 2,229 contracts to 24,781.

Silver net length rose to 31,150 contracts, up 22% from the previous week and the fastest rise compared to the last three weeks. The bullish interest in silver pushed prices to their highest level in a month to a high of $18.655 an ounce.

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