(Kitco News) - After fleeing the gold market for several weeks, speculators returned as buyers to gold, adding to their net-long futures and options combined positions, according to U.S. government data released late Friday.
Speculators continued to add to their net-long positions in other precious metals and copper markets, as reported in the Commodity Futures Trading Commission's weekly commitment of traders data for the week ended Feb. 8.
The return of speculators buying gold futures and options ends a five-week decline in the net-long position in both the legacy and disaggregated reports compiled by the agency.
Prices for all metals rose during the reporting time frame, which ran from Feb. 1-8. Unrest in Egypt helped fuel the rise in prices and encouraged funds to return to all the precious metals.
April gold futures on the Comex division of the New York Mercantile Exchange gained $23.80 an ounce during that time, settling on Feb. 8 at $1,364.10. Comex March silver rose $1.757 an ounce and settled at $30.271. Nymex April platinum gained $28.90 an ounce, settling at $1,861.90, while March palladium rose $14.90 an ounce to $838.45. Comex copper gained 2.70 cents to $4.5740 a pound.
Managed-money traders in the disaggregated report for gold increased their gross long positions by 14,772 contracts and cut their gross shorts by 6,280 contracts, lifting the net-long to 145,846 contracts. The producer and swap dealer categories cut gross longs and raised gross shorts, adding to their net-short positions. In the legacy report, non-commercials added 14,748 gross long contracts and cut 5,827 contracts, allowing the net-long to rise to 191,281 contracts. Commercials cut gross longs and added to gross shorts, pushing up their net-short position.
Citi said given that the current fund net-long is one of the smaller positions of the past two years, it bodes well for gold bulls. "After the recent round of long liquidation, both by money managers and in terms of the total open interest in the market, we see plenty of room for an ongoing, intermediate-term cycle of buying," Citi said.
Barclays Capital said the action by funds was a combination of fresh long positions being established and short positions being covered, suggesting short-term interest has turned "more positive" toward gold.
Managed-money accounts in silver increased their gross longs by 5,995 contracts and cut their gross shorts by 289 contracts, increasing the net-long by 29,742 contracts. The producer and swap dealer categories saw gross longs cut and gross shorts increased, which raised their net-short position. Funds in the legacy report raised gross longs by 6,273 contracts and gross shorts by 206 contracts, hiking the net-long to 39,229 contracts. Commercials increased both gross longs and shorts, but added more shorts, lifting the net-short position.
Citi noted the flow in silver is similar to gold, as the fund position is moderate, but unlike gold, silver's open interest is 26% higher than a year ago. "The contrast between the big year-on-year increase in open interest and the still-modest fund positioning suggests that it has been small traders responsible for the growth in open interest, and possibly representing some stale longs vulnerable to any renewed price weakness. Money managers may continue a cycle of long accumulation, but we see less ambiguity and a more liquid risk/reward trade-off in gold," Citi said.
Speculators continue to add to positions in the platinum group metals, extending the record net-long position in platinum. Managed-money accounts are net-long 27,536 contracts in platinum and net-long 14,212 contracts in palladium. Non-commercials increased their gross long position, lifting the net-longs for both PGMs. Non-commercials are net-long 31,171 contracts in platinum and net-long 16,149 contracts in palladium.
Copper saw an increase in the net-long for the managed-money accounts, too. Their net-long now stands at 36,590 contracts. In the legacy report the non-commercials' net-long rose to 29,460 contracts. Commercials increased their net-short.
In copper financial investors still look optimistic and increased their bets on rising prices on a broad front and quite sharply in part in the week up to Feb. 8, Commerzbank said. In the case of copper, the managed-money net-long rose by 14% to around 36,600. This is the highest level in five weeks and puts net long positions at only a good 6% shy of the record high at the end of last year, Commerzbank said.
For future details, please visit the CFTC's website: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm
By Debbie Carlson of Kitco News firstname.lastname@example.org