FOCUS: Speculators Cut Bullish Exposure to Gold, Silver - CFTC

(Kitco News) - Drops in gold and silver futures prices pushed speculators to cut bullish positions as of Oct. 19, according to data from the U.S. government.

The Commodity Futures Trading Commission's weekly commitment of traders reports showed speculators trimmed long positions in gold and silver contracts traded on the Comex division of the New York Mercantile Exchange. The CFTC's latest report was released Friday afternoon. Outflows were seen in both its disaggregated and legacy reports.

The time frame runs from Oct. 13 to Oct. 19 and includes the period when gold set its all-time nominal high of $1,386.40 an ounce for the December contract and silver's recent multi-decade high of $24.815 an ounce, both made on Oct. 15. Since that day, prices for the two metals began to crumble as the dollar started to rebound and the metals' prices decayed into the rest of the week follow the close of the data reporting.

In the disaggregated report, managed-money participants are net-long 218,061 contracts of gold. They cut longs by a gross 10,117 contracts and added 1,365 gross shorts. In this report, it was the first time since mid-July that speculators did not accumulate gold longs. Producers cut exposure to gold on both sides, while swap dealers added to longs and cut shorts. In the legacy report, non-commercial participants are net-long 275,916 gold contracts, having cut 6,577 gross longs and 239 gross shorts.

On the last day of the reporting timeframe, Oct. 19, gold saw its largest down day in several weeks. During the entire time it lost about $34 an ounce, with much of the loss occurring on Oct. 19, settling that day at $1,336.

In silver, speculators have cut exposure to longs for the second week in a row. In the disaggregated report they are now net-long 38,048 contracts, having cut 2,720 gross longs and added 153 gross shorts. Producers and swap dealers cut exposure on both sides. In the legacy report, non-commercials are long a net 46,469 contracts, having cut 3,434 gross longs and 1,962 gross shorts.

Much like gold, silver saw the bulk of its price-losses occur on the last day of the reporting timeframe. It ended on Oct. 19 at $23.78, having lost about 15 cents an ounce. Similarly, Barclays Capital said, both precious metals saw their net-length reduced by long liquidation. They note the drop in fund net-length in the futures market contrasts with growing interest in silver exchange-traded funds, which set a record high of 14,285 metric tons across the six products they track. That longer-term interest is likely limiting further losses in silver.

Morgan Stanley said the "persistent" liquidation silver and gold experienced following the Chinese rate hike from last week is something to watch closely. Gold may retest downside support of $1,299, which would be a 38.2% retracement of the recent rally or $1,272, a 50% retracement, in the coming weeks. "Silver also looks vulnerable to further retracement given its close link to gold," they said.

The platinum group metals saw modest upticks in net-long positions in both reports for speculators. Platinum net-longs for speculators in the disaggregated report are now 22,607 contracts and 25,926 in the legacy report. For palladium, net-longs in the disaggregated report now total 14,086 and reached 15,512 contracts in the legacy report.

Speculators added slightly to their net-longs in copper. In the disaggregated report copper net-longs total 32,756 contracts and 26,086 in the legacy report.

For more information, please visit the CFTC's website:

By Debbie Carlson of Kitco News

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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