Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks Correct into Bitcoin Happy Thanks Halving - Earnings Season Buying Opps - 4th July 24
24 Hours Until Clown Rishi Sunak is Booted Out of Number 10 - UIK General Election 2024 - 4th July 24
Clown Rishi Delivers Tory Election Bloodbath, Labour 400+ Seat Landslide - 1st July 24
Bitcoin Happy Thanks Halving - Crypto's Exist Strategy - 30th June 24
Is a China-Taiwan Conflict Likely? Watch the Region's Stock Market Indexes - 30th June 24
Gold Mining Stocks Record Quarter - 30th June 24
Could Low PCE Inflation Take Gold to the Moon? - 30th June 24
UK General Election 2024 Result Forecast - 26th June 24
AI Stocks Portfolio Accumulate and Distribute - 26th June 24
Gold Stocks Reloading - 26th June 24
Gold Price Completely Unsurprising Reversal and Next Steps - 26th June 24
Inflation – How It Started And Where We Are Now - 26th June 24
Can Stock Market Bad Breadth Be Good? - 26th June 24
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Commitment of Traders (COT) Report and Gold Positions

Commodities / Gold and Silver 2010 Jul 26, 2010 - 01:25 PM GMT

By: Miles_Banner

Commodities

Best Financial Markets Analysis ArticleLast week saw most commodity prices rally as investor sentiment reacted positively to economic conditions. The gold price didn’t really move much, but, under the surface, big things are still bubbling which could have big repercussions.

The Gold Bugs Index (HUI) is up 5.10% from the start of the year.


The SPDR Gold Shares (GLD) is up 5.71% from the start of the year.

Combined Exchange Traded Fund gold holdings were 65.41m ounces (22 July). This is down 415,127 ounces from the week before, but up 8.71m ounces from the start of 2010.

Gold prices traded below $1,180 last week but received strong demand as bargain hunters and short covering buoyed the price. It briefly broke through $1,200 twice on Friday. Once in the afternoon hours of Hong Kong trading and the other just before the New York open.

Once the Comex opened in New York an all too familiar pattern resumed and the gold price got beaten back down below the $1,200 mark. After the London PM fix was in it dropped further to close for the week just shy of $1,190.

Investors that watch the gold price closely will note the timings. Most of the action in the gold price occurs when the Comex opens and shortly after the London gold fix is in. Could this spell the work of the bullion banks?

Here’s the last three days spot price overlaid (the green line is Friday’s). You can see that the price action revolves around the same times – when the Comex opens and just after the PM gold fix.

The Commitment of Traders (COT) report and gold positions

A look at last week’s COT report (which shows a breakdown of each Tuesday’s open interest for markets, and is released on Fridays) shows the large commercial traders (including the bullion banks, large dealers and swap dealers combined) reduced their net short gold positions by 13.2 percent. That’s a big figure.

Such a large number has stirred commentators. People are pointing to the Dodd-Frank Financial Reform Bill as a possible explanation. Others are suggesting a change in mentality – that the sellers are starting to think the price will not go much lower.

Commenting on Friday’s commitment of traders (COT ) report Ted Butler notes…

“We have a position now in gold where they’ve (commercials – which is where the bullion banks hide) taken out 75000 contracts net… in three weeks… the 75000 in gold represents 7.5m ounces of gold. That’s about $9bn worth… These are big, big declines big three week declines. Some of the biggest on record.”

Ted’s bullish 80 – 85 percent on gold and 100 percent on silver.

Listen to his interview at King World News here.

Summary

The huge decline in short positions is a bullish indicator for the gold and silver prices. And it is certainly interesting to speculate as to the possible explanations. But we can’t help but be realists. And because the gold price has traded in a narrow range for a while we believe it’ll take something big to change this. Whether that be movement in the IMF sale, some fundamental change in the value of the dollar (for which we note there’s been no correlation to gold of late), or signs of strength/ weakness in economies.

Stay tuned for next week, and sign up to our free weekly email below.

Digger
Gold Price Today

We leave you this week with a fascinating article forwarded to us by one of our readers, James. It’s a Bloomberg story that reveals the insatiable appetite for gold amongst central banks – Central Bank Gold Holdings Expand at Fastest Pace Since 1964

© 2010 Copyright Gold Price Today - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in