Speculators Return To Gold As Big Buyers -CFTC
Worries about spreading unrest in the Middle East after protests in Libya encouraged speculators to seek safe-haven in gold futures and options, according to U.S. government data released Friday.
Net-long positions for funds increased in both the legacy and disaggregated weekly commitment of traders reports released by the U.S. Commodity Futures Trading Commission for the week ended Feb. 22.
The protests in Libya pushed up crude oil prices during the week, hurting more industrial-demand sensitive metals such as the platinum group metals and copper, which fell on ideas rising energy prices could hit economic growth.
April gold futures on the Comex division of the Nymex gained $27 an ounce during the timeframe, settling at $1,401.10 on Feb. 22. May Comex silver futures rose $2.135 an ounce, settling at $32.856. Nymex April platinum fell $45.30 an ounce to $1,786.30 and Nymex June palladium dropped $34.30 an ounce to $807.40. Comex May copper fell 18.3 cents a pound to $4.363.
Managed money accounts significantly increased their net-long in gold, adding 22,203 gross longs and cutting 722 gross shorts, lifting the net-long position to 182,739 contracts. Producers and swap dealers increased their net-short position by adding more gross shorts than gross longs.
Non-commercials in the legacy report added 17,778 gross longs and cut 3,954 gross shorts, pushing up the net-long position to 213,250 contracts. Commercials added to both sides, and increased their net-short position.
Commerzbank said it was “astonishing” that given the ongoing unrest in North Africa and the Middle East, gold prices have not risen more that it has. “Even the increase of net long positions of speculative financial investors has helped gold only a bit,” it said.
There was little change in speculators net-long position in the disaggregated report. They increased gross longs by 487 contracts and gross shorts by 208 contracts, modestly raising the net-long to 35,438 contracts. Producers raised their net-short by adding more gross shorts than longs. Swap dealers also raised their net-short, but cut more gross longs than gross shorts.
In the legacy report, non-commercial traders added more gross shorts than gross longs, slicing the net-long position to 43,476 contracts. Commercials lowered their net-short by clipping gross longs and adding gross shorts.
Funds cut gross longs and increased gross shorts in platinum, slicing the net-long position for managed-money accounts to 25,039 contracts. Non-commercials mimicked the action in the disaggregated report, cutting gross longs and adding gross shorts, lowering the net-long position to 29,091 contracts.
Managed-money trimmed their net-long positions for the second week in palladium by cutting both gross longs and shorts, lowering the net-long to 13,410 contracts. In the legacy report, the non-commercials cut from both sides, slightly lowering the net-long position to 15,751 contracts.
Funds withdrew gross longs and added gross shorts, lowering the net-long position to 24,193 contracts in the disaggregated report. The non-commercial trader cut more gross longs than gross shorts, dropping the net-long position to 23,230 contracts in the legacy report.
“Against the backdrop of the unrest and the higher risk aversion as a result, speculative financial investors have hugely reduced their bets on rising prices in the case of copper in the week up to Feb. 22, as expected,” Commerzbank said, pushing their net-long to the lowest level in five months.
“However, the price of copper retreated by only a good 5% in this reporting period. Given the rise in price since then, net long positions are likely to have increased again in the meantime,” the bank said.
For a more detailed breakdown, please visit the CFTC website: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm