HOUSTON -- Perhaps it is at turning points when the current COT positioning becomes counterintuitive. For example, notice in the graph below that even with the huge additions to net long positioning (+87,900 contracts in 3 COT reports as gold rose $67 from $1259 to $1326), Managed Money traders have only just now returned to what used to be a low level of net longs for gold in the 125,000-lot level. See the chart below for a “visual” on that notion. It will be interesting to see if gold reacts to the upside despite the large net long additions. Won’t it?
COT data from CFTC, Gold from Cash Market. MM net long position 125,965 contracts.
Notice in the graph below the apparent urgency to clear their previously large gross shorts (from an extremely high 73,741 June 10 with $1259 gold to a much, much lower 23,273 July 1 with $1326 gold) - something we might expect at a major turning point.
What we may be seeing, and the jury is still out of course, could be the COT "returning to a more normal state of hedging and long positioning" by the major players. Something to watch for at the very least. Our interest is certainly piqued, as should that of our readership.
Although they have collectively added a large number of new hedges in the past three reporting weeks (from a low 13,864 to 52,321 net short) the Producer/Merchants still have a long way to go to get back to what used to pass for a normal amount of gold hedging as shown in the last chart below. A very long way to go indeed, clearly. (PM position July 1 53,321 net short.)
That is all.