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COMEX Managed Money Traders Cover One-Week Record Number of Gold Shorts

 -- Published: Monday, 30 June 2014 | Print  | Disqus 

By Gene Arensberg

Trading pit farHOUSTON -- Traders the Commodity Futures Trading Commission (CFTC) classes as Managed Money were so sure the downtrend for gold has ended that they collectively covered or offset with new long trades a record high number of their short bets in one commitment of traders (COT) reporting week. In the process Managed Money traders also reported a new one-week record increase in their net long positioning for gold futures. We conclude that Managed Money traders are positioning for higher gold prices in an aggressive way.

Just below is the recent positioning data published by the CFTC for Managed Money traders in gold futures.

20140629 GOLD MM DATA

Source: CFTC for COT data, Cash Market for gold. GGR.

Our recap of the most recent week, including a comparison to the previous week, is at this link.

Notice that as gold gained $47.61 or 3.7% Tues/Tues (from $1270.31 to $1317.92) Managed Money traders very strongly increased their collective net long positioning by a huge 46,371 contracts (from 53,559 to 99,930 net long, an increase of 87%) – the largest one-week increase in Managed Money net long positioning in the disaggregated COT (DCOT) dataset (data back to 2006). Here's the Managed Money Net positioning graph for a visual.

20140629 GOLD MM NET

Source (all graphs): CFTC for COT data, Cash Market for gold. GGR

Apparently Managed Money traders were convinced as of Tuesday, June 24, that the downtrend for gold is over and a new gold uptrend has begun. We say that because, looking at the data, Managed Money covered a whopping 25,424 shorts in one COT week (from 60,065 to 34,641 shorts) – the largest one-week reduction of Managed Money gold shorts in DCOT history. Their rapid short covering in part explains the large advance for gold for the week. Here’s how the record short covering looks graphically.

20140629 GOLD MM SHORT

We just about have to conclude that the hedge funds, commodity trading advisors and other large actors who trade COMEX gold futures for clients (not for their own book) have decided that it is time to position for higher, not lower gold prices based on their enormous short covering and new long positioning shown this past COT reporting week. Otherwise, why the hurry to cover their shorts?

Vik small

Are they right?

20140629 GOLD graph

For a full sized version of the above graph follow this link.

That is all.

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