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(Kitco News) – After a steady three-month decline, the latest trade data from the Commodity Futures Trading Commission (CFTC) shows that hedge funds are starting to jump again as the market progresses to long-term resistance at $ 1,800 an ounce, according to some analysts.
The CFTC’s disaggregated Traders’ Commitments report for the week ending June 23 showed that money managers increased their speculative gross long positions in Comex gold futures by 25,648 contracts to 161,593. At the same time, short bets increased by only 821 contracts to 32,078. Gold’s net long position is currently 129,515 contracts, almost 24% more compared to the previous week.
“This is equivalent to buying 119 tonnes through the futures market during this period,” analysts at Commerzbank said.
During the survey period, gold prices recovered to their highest level in almost 3 years; although the market has not been able to exceed $ 1,800 an ounce. Gold appears to be finding solid support above $ 1,750 an ounce.
“The increase in long positions was also driven by a weakening of the USD and a drop in real yields, as rising inflation expectations outweighed an increase in yields across the curve, lowering real rates ” , said the TD Securities analyst.
According to Commerzbank analysts, gold ‘The appeal of safe haven is back in vogue as the United States and the world continue to grapple with the constant spread of the coronavirus. Economists have noted that some states plan to stop its reopening, which could affect economic growth just as optimism for a strong recovery began to grow.
Commerzbank said that in today’s environment it is only a matter of time before gold ‘s significant breaks in resistance level.
“There is much to suggest that gold will continue on its upward trajectory this week. Risk aversion has returned, ”analysts said.
Ole Hansen, head of commodity strategy at Saxo Bank, noted that hedge funds in recent months had reduced their gold bullish bets by 50%. He added that this renewed speculative interest in the yellow metal could be a sign that the market is ready to explode.
While hedge funds are making a comeback to the gold market, they are still hesitant to invest in silver, according to the latest trade data.
The disaggregated report showed that money-managed speculative gross long positions in Comex silver futures increased by 3,838 contracts to 37,565. At the same time, short positions increased by 2,333 contracts to 16,099.
Silver’s net length is currently 28,743 contracts, 5.5% more than the previous week.
During the survey period, silver prices exceeded $ 18 an ounce.
Hansen said silver could continue to see lackluster demand until gold prices exceed $ 1,800 an ounce.
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