Large speculators once again upped their bullish positioning in gold futures during the most recent reporting week for data compiled by the Commodity Futures Trading Commission (CFTC).

During the week-long period to Dec. 24 covered by the report, Comex February gold gained $24.20 to $1,504.80 an ounce, while March silver rose 78.1 cents to $17.853.

Net long or short positioning in the CFTC data reflect the difference between the total number of bullish (long) and bearish (short) contracts. Traders monitor the data to gauge the general mood of speculators, although excessively high or low numbers are viewed by many as signs of overbought or oversold markets that may be ripe for price corrections.

The commission issues two reports each Friday — a so-called “legacy” report and a “disaggregated” report, started in 2009 and meant to offer more detail.

The disaggregated report shows that in the week to Dec. 24, money managers’ net-long position rose to 218,846 futures contracts from 201,721 the week before. Nearly the entire rise was the result of fresh buying, as gross longs rose by 16,750 lots. Gold’s net-long position has now risen by 19% over the last two reporting weeks.

Bob Haberkorn, senior commodities broker with RJO Futures, said have been some safety flows into gold even though equities have been strong. This is because some market participants are hedging some of their portfolio in case the stock market is too lofty and corrects sharply lower.

“There is no yield in Treasuries,” he continued, explaining why investors are turning to gold as their safety play.

Furthermore, Haberkorn said, gold tends to fare well seasonally in the period after Christmas, thus some traders were buying ahead of this.

In the case of silver, money managers’ net-long position rose to 52,897 futures contracts from 35,479 in the prior week. Most of the increase was fresh buying, as the number of total longs rose by 13,585 contracts. There was also some short covering as reflected by a 3,833 decline in gross shorts.

Author: Allen Sykora

Source: Kitco: Money managers continue hiking bullish gold positioning

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