Money Managers Up Gold Net Length But Cut Silver Positioning
– Allen Sykora
Large speculators upped their common bullish positioning in bullion futures though embellished their net length in silver, according to a many new weekly news expelled by a Commodity Futures Trading Commission.
The information covers a week to Tuesday, Aug. 23. During this period, Comex Dec bullion fell to $9.90 to $1,341.40 an ounce, while Dec china prices slid $1 to $18.92.
Net prolonged or brief positioning in a CFTC news reflects a disproportion between a sum series of bullish and bearish contracts. Traders guard a information to sign a ubiquitous mood of speculators, nonetheless excessively high or low numbers are noticed by many as signs of overbought or oversold markets that competence be developed for cost corrections.
The elect issues dual reports any Friday — a supposed “legacy” news and a “disaggregated” report, started in 2009 and meant to offer some-more detail.
The disaggregated news shows that income managers upped their net-long, or bullish, positioning in bullion futures to 253,684 contracts in a week to Aug. 23 from 242,727 as of a week before. There was an boost in uninformed buying, as reflected by a arise of 7,398 sum longs to 284,550. Also, there was brief covering, or shopping to equivalent a position in that somebody formerly went short, or placed a bearish bet. This was reflected by a 3,559-lot decrease in sum shorts to 30,866.
Speculators upped their net-long positioning as many in a marketplace believed that a improvement competence have been trite given continued ambiguity on a Federal Reserve’s interest-rate policy, pronounced a investigate note from TD Securities.
“However, following developments (at a weekend Fed symposium) in Jackson Hole, bullion specs competence again start to cut their prolonged bearing and build shorts in response to a flourishing account that that a U.S. executive bank competence be once again severely deliberation a rate travel in 2016,” TDS continued. “Still, (with) a ever-present mercantile and complement risks, along with a Fed skittishness when it comes to rising rates, investors are doubtful to get too impassioned in their net-long position downward adjustments.”
Sean Lusk, executive of blurb hedging with Walsh Trading, forked out that some of this newfound net length competence have been liquidated already as bullion fell during a latter partial of final week in a run-up to Fed Chair Janet Yellen’s debate Friday during Jackson Hole. Still, Lusk said, “there is still a sizeable prolonged in this marketplace that could come dismantled following subsequent Friday’s (U.S. nonfarm payrolls) jobs number, should it surpass expectations.”
In china futures, income managers cut their net prolonged to 76,387 futures contracts as of Aug. 23 from 81,456 a week before. There was prolonged liquidation, as sum longs declined by 1,891 lots to 96,876. In addition, there was also some uninformed selling, as reflected by a 3,178 arise to 20,489.
Silver Prices – Outperformance set to continue in Q3
– Boris Mikanikrezai
Silver has been a star performer of a metals so far, enjoying a fantastic convene of 21.5 percent in a second entertain after a benefit of 11.3 percent in a first, predominantly due to a clever miscarry in suppositional and financier demand. We design outperformance in china prices to continue in a third entertain interjection to a discreet Fed though renewed offered vigour could seem in a fourth entertain due to weaker industrial direct and a probable pick-up in suppositional and financier selling. In a meantime, china appears overbought for this entertain and a probable spike above $22 should attract sidestep selling.
Overall trend – In line with a expectations, china prices rose to a uninformed 2016 high in a second entertain due to stronger financier and suppositional direct amid a understanding macro sourroundings for changed metals. Silver also outperformed bullion given a gold-silver ratio was historically too high, as we highlighted in a final report. It averaged 79 in a initial entertain though has given reverted toward a longer-term (1980-present) normal of 62, helped by reduced risk hatred – a VIX forsaken to 15.69 in a second entertain from 20.54 in a initial quarter. Silver competence continue to perform improved than bullion in a third entertain given we design a Fed to sojourn on reason and not adjust a market’s expectations about rate rises due to towering doubt about a US opinion after new unsatisfactory data. But likewise to gold, we design downward vigour in china prices in a fourth entertain given US genuine seductiveness rates are expected to bottom out once a Fed becomes some-more assured about scheming a marketplace for a steeper trail of rates. Although china cave prolongation competence tumble in 2016 after being fast final year, china prices are expected to humour from stronger throw supply triggered by aloft prices, weaker industrial direct – accounting for 54 percent of sum china direct – and renewed financier and suppositional selling. We design a $17 – $24 per unit operation in a third quarter.
ETF investors bought 302 tonnes in a second entertain after a record 745 tonnes in a first. Silver ETF direct is set to sojourn plain in a third entertain amid a understanding macro sourroundings though some profit-taking is expected in a final entertain of a year, we feel.
Money managers bought 4,712 tonnes in a second entertain and 5,284 tonnes in a initial on Comex after offered 943 tonnes final year. Although spec positioning is clearly stretched on a prolonged side, serve spec shopping is probable in a third entertain though should spin into clever offered in a fourth quarter, joyless prices.
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