Gold Sees Aggressive Long Bets While Silver Longs Reduced - TDS
Research Team at TDS, lists down the CFTC Commitment of Traders Report for the week ending May 3rd, 2016.
“Increasing conviction that US rates are unlikely to move higher in the near term along with a dropping USD following the BoJ inaction prompted money managers to take very aggressive long bets on gold. The positive price action also prompted specs to cover short exposure as they believed that the downside is limited in the improving precious metals environment, which helped to increase net longs sharply. While gold looks overbought on numerous metrics, spec positioning looks similar to what it was back at the end of 2005/early 2006, before a large rally started, if the Fed is more restrictive than traders currently expect, gold is due for a big correction.
In stark contrast to gold, silver investors reduced net long holdings by an equivalent of one percent of open interest. Investors cut longs and grew short holding on the belief the rally may have been overdone for now.
Positive precious metals sentiment amid dovish Fed expectations, along with strong auto sales expectations for April, convinced specs to grow their net long palladium positioning by a robust 3.3 percent of open interest. Many investors now believe that markets will get tighter amid supply side weakness and lack of bullion flows due to low carry costs, which prompted significant short covering activity.”