As highlighted last month, short positioning in gold was at the highest level since April 2019. This laid the seeds for a potential short squeeze. While a squeeze did unfold, it was brief. Sellers have regained control of the market and are driving the price back down.
Please note: the COTs report was published 9/2/2022 for the period ending 8/30/2022. “Managed Money” and “Hedge Funds” are used interchangeably.
Please note: the COT report was published 7/29/2022 for the period ending 7/26/2022. “Managed Money” and “Hedge Funds” are used interchangeably.
As discussed last month, overall net positioning is the smallest it has been since May 2019. Then, on July 12, Managed Money went short gold for the first time since April 2019.
Are those shorts about to get squeezed?
Since the peak on March 8, Managed Money has reduced its Net Long positions by 60k contracts or 43%. Despite massive selling, the gold price has actually held up fairly well. The last time Managed Money net longs dropped this low in February, gold was struggling at the $1800 level, versus the struggle at $1900 now.
Please note: the COTs report was published 4/29/2022 for the period ending 4/26/2022. “Managed Money” and “Hedge Funds” are used interchangeably.
Please note: the COTs report was published 10/1/2021 for the period ending 9/28/2021. “Managed Money” and “Hedge Funds” are used interchangeably.
The Commitment of Traders analysis last month showed a potentially bullish setup in both gold and silver. The washout of Managed Money Net Long contracts that occurred in early August appeared to be over and a rebound was underway. Unfortunately, it looks like there was another washout in September. As highlighted recently, it’s possible exhaustion may be near. However, if another washout occurs, it would probably drive Managed Money net positioning negative for the first time since Nov 2018.
Below is a look at the details.
The price of gold and silver can be driven by many variables both technical and fundamental. Fundamental drivers include Fed meetings/speeches, its balance sheet, inflation data, jobs numbers, market risk appetite, etc.
This analysis examines some of the more technical factors driving prices (e.g. Comex OI, Miners price action, technical price action). The CFCT Cots report can show investor positioning but is covered in another analysis.
The CFTC Commitment of Traders (COTs) report is released once a week and shows a breakdown of open interest by trader category. As discussed in the gold/silver pricing analysis, Open Interest can be a major factor in the metal price. The CFTC breaks down open interest by: