Gold: Net long positioning aggressively reduced – TDS

Research Team at TDS, lists down the CFTC Commitment of Traders Report for the Week Ending May 24th, 2016.

Key Quotes

“A continued rise in the probability the Fed will pull the trigger on higher rates this summer, a rising USD and strong equity markets have helped to prompt money managers to aggressively reduce their overextended net long gold positioning. The accompanying slide in prices saw specs cut gold longs by a large 55.4k lots and increase short exposure by 9.2k lots, which cut net long exposure by a very large 5.1% of open interest. While gold looks set to test recent lows near $1,200/oz, a rout is unlikely as the US central bank is likely to lift rates modestly into 2017. For similar reasons, Silver net long exposure also dropped by an aggressive 3.4% of open interest.

The gold-inspired negative precious metal environment, along with concerns auto sales may moderate around the world outside the US drove speculative investors to cut palladium net long exposure by a very large 8.3% of open interest. Specs unloaded 3.6k lots worth of long positions in order to capitalize on the recent price surge and used 1.4k lots to bet on additional palladium downside.

China demand fears amid a rising USD, a dropping RMB and unimpressive economic statistics convinced specs to sharply cut long copper exposure and add to short positioning. Speculative investors went deeper into net short territory by a large 10.5 lots (4.5% of open interest), as they feared that prices may retest early-2016 lows. But given the large amounts of net short increase of late, there may be room to move long copper at the earliest opportunity.”