Gold investors and hedge funds have greatly lowered their gold exposure as the asset continues to be pushed down by a stronger dollar and increasing bond yields, according to the latest information from the Commodity Futures Trading Commission.
The CFTC disaggregated Commitments of Traders release revealed hedge fund managers lowered their speculative long stakes in Comex gold futures to a level of 131,057 contracts, down from 36,039. During that same period, short positions up-ticked by 2,296 contracts to a level of 52,823.
“Gold experienced a huge reduction in overall longs after traders were scared by the increase in ten-year bond yields above 1% and a sturdier dollar,” said the head of commodities at Saxo Bank, Ole Hansen.
Gold’s net length now is at a number of 78,234 contracts, a fall of over 36%. Optimistic bets in gold have lowered to their lowest number since May of ’19, according to the information.
The huge drop in speculative desire pushed gold lower under $1,850 per ounce during the survey time frame.
Analysts argue that the aggressive selling of gold could go on. Although long-term circumstances look bullish for the precious metal, investors at TD Securities reported Friday that weakening interest could damage the asset.
“From here forward, gold might stay in this unfortunate position until economic conditions prompt investors to lower their optimism— which in our opinion may happen soon,” the analysts said.
However, other analysts see a positive trend as demand for exchange-traded gold-backed products has risen as speculators change their long positions to short.
“ETF investors view the price as a great buying moment,” said Carston Fritsch, one of Commerzbank’s precious metals analysts. “Bloomberg says ETF holdings went up by almost 17 tons. The inflow was triggered mostly by the SPDR Gold Trust, which is a favorite among larger institutional investors.”
Although investors have been quickly leaving the gold market, the silver market seems to be holding.
The disaggregated report revealed speculative long positions in Comex silver futures decreased by 3,485 contracts. During this time, short positions increased 461 contracts to a level of 27,861.
The net length of silver currently stands at 41,944 contracts, lower by 8.5 percent from the previous week. And its weakest level since late Nov.
During the survey time-frame, silver was able to maintain support of above $25 per ounce.