The move to record highs in gold came with a rush of new speculative long positions, according to U.S. government data released late Friday.
Speculators also added to their long silver positions, but the aggressiveness in establishing new positions has slowed slightly.
The Commodity Futures Trading Commission’s weekly commitment of traders report showed managed-money accounts piling back into those precious metals. In the disaggregated report for the week ended Sept. 14, managed-money accounts added a gross 9,667 contracts and now stand net-long 227,384 contracts, just shy of the June high of 227,831, the last time gold set an all-time nominal record.
Similarly, non-commercials in the legacy CFTC reports saw a hike in the long positions, with additional 10,692 gross long positions accrued. They are now net-long 271,988 contracts, the biggest position since June 29 when they were net long 273,023. Barclays Capital notes this is the sixth consecutive week speculative positions have risen in gold.
During this time, gold prices rose $14.20 an ounce, with the December gold contract on the Comex division of the New York Mercantile Exchange taking out the previous all time high, with a settlement on Sept. 14 of $1,271.70. Since that date gold prices have continued to gain, settling at $1,277.50 on Sept. 17, which could mean another rise in speculative longs when the CFTC releases its data Friday afternoon.
The rise to new highs came as market participants reaffirmed their view of gold as a currency. The Bank of Japan intervened in foreign exchange markets to push down the yen and there were rampant rumors of another quantitative easing program by the U.S. Federal Reserve. “In an environment of sustained (dollar) weakness, OECD central bank liquidity and low/negative real interest rates coupled with a growing consensus for further US quantitative easing, we believe gold prices will remain well supported in the coming quarters,” said Morgan Stanley.
The bank said hedge-buy backs also supported gold. “While (dollar) weakness and speculation of further U.S. Fed (quantitative easing) sparked renewed investment buying, we think AngloGold Ashanti's capital raising to buy back its outstanding gold hedges was the key catalyst for the price surge,” it said.
During this time, the CFTC reported that swap dealers added a fair amount to short positions and the net short position for commercials was largely flat since they added to long and short positions almost evenly.
Managed-money accounts added to their record silver net-long in the disaggregated report, but the heft with which it bought in previous weeks has lessened. They are net-long 46,580 contracts, having added 1,978 gross longs and added 122 gross short. Swap dealers and commercials added to their net-shorts.
In the legacy report the non-commercials added 2,134, which allowed them to crack the 50,000 level for the first time since Oct. 20, 2009. They are net-long 50,501 contracts.
Silver has rallied sharply, supported by the strength in gold and outpacing the yellow metal in its rise. In the week ended Sept. 14, Comex December silver gained 42.3 cents an ounce and settled at $20.432. It went on to rally as high as $21, but pulled back to settle at $20.816.
In the platinum group metals, managed-money added to longs in both platinum and palladium. They are net-long 17,587 contracts of platinum and net-long 12,317 palladium. In the legacy report the non-commercials are 19,926 and 14,270 contracts, respectively.
Copper saw a modest drop in its net-long managed-money position in the disaggregated report, falling by about 450 contracts. They are net-long 23,518 contracts. Managed-money accounts added 217 gross long contracts and 670 gross net-shorts.
The legacy reports showed a rise in non-commercial net-long positions, arriving at 16,360.
For a detailed breakdown of the CFTC data, please visit: http://www.cftc.gov/dea/options/other_sof.htm
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