Funds Cut Positions in Gold By 4% and Silver By 20% – Gold Positions at 3 Year Low

Gold’s London AM fix this morning was USD 1,662.50, EUR 1,256.61, and GBP 1,021.44 per ounce. Friday’s AM fix was USD 1,654.00, EUR 1,250.28 and GBP 1,019.60 per ounce.

Silver is trading at $31.24/oz, €23.73/oz and £19.29/oz. Platinum is trading at $1,577.75/oz, palladium at $680.30/oz and rhodium at $1,350/oz.

Gold rose $4.70 or 0.28% in New York on Friday and closed at $1,662.30/oz leading to a 1.24% gain for the week.

Gold has traded sideways in Asia and continues the pattern in Europe this morning relatively unchanged from Friday’s close and in a range between $1,661/oz and $1,666/oz. 


Cross Currency Table – (Bloomberg)

Gold hovered around a two week high on Monday on the prospect of more save haven money flowing into bullion as the dollar is under pressure from the US weak economic data and speculation that the Fed could embark on QE.

Although there are still doubts as to whether the economic slowdown will allow the Fed to embark on a 3rd round of bond buying – the expectations of it and in addition the growing fears of the debt crisis in Europe could lead to gold breaking out of its current price range.

The US economy, the world’s largest, expanded at a 2.2% in the first 3 months of the year, below economists’ expectations of a 2.5% pace.  

Spain, the euro zone’s 4th largest economy, has another bond auction this week after having recently been downgraded  2 notches  to BBB+ and saw yields increased on its debt.

Gold looks set to close April marginally lower (-0.3% in USD) although as can be seen in the chart below much of the losses were incurred in the sharp selloff, some $30, on April 3rd (see chart below).

CFTC data from Friday showed that money managers cut long positions on Comex gold futures and options in the week ended April 24 to the lowest level in more than three years.

Managed funds slashed 2,225 long positions, or bets prices will rise, and added 2,450 short positions, or bets prices will fall.


Gold 30 Minute Chart – (Bloomberg)

The managed-fund net long position was cut by 4% and now represents around 10.7 million troy ounces of gold.

This took their net position down 4% to 107,600 long contracts, from 112,275 long contracts. That’s the lowest in CFTC data since the week ended Jan. 20, 2009.

The low in January 2009 corresponded with the low in the gold price for 2009 – monthly low of $807/oz – prior to seeing gains which saw the gold price rise more than 50% to above $1,200/oz in late November 2009 (see chart below).

A similar price gain would see gold rise from $1,663/oz today to $2,494.50/oz in the coming months.

Also of note is the fact that large commercial traders have greatly cut back their short positions in gold and especially in silver. This has often been a sign of a bottom and suggests that they do not expect gold and silver to fall much further.

In Comex silver futures and options, these traders added 248 long contracts and 2,883 short contracts. This reduced their net long position by 20% to 10,756 contracts, from 13,390 contracts the previous week. The net silver position represents around 53.7 million troy ounces of silver.

OTHER NEWS
(Bloomberg) — Gold Traders Trim Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators decreased their net-long position in New York gold futures in the week ended April 24, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 134,994 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 7,011 contracts, or 5 percent, from a week earlier. 

Gold futures rose this week, gaining 1.3 percent to $1,664.80 a troy ounce at today’s close. 

Miners, producers, jewelers and other commercial users were net-short 167,237 contracts, down 8,854 contracts, or 5 percent, from the previous week. 

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices. 


Gold 5 Year Chart – (Bloomberg)

(Bloomberg) — Silver Traders Trim Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators decreased their net-long position in New York silver futures in the week ended April 24, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 16,471 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 1,936 contracts, or 11 percent, from a week earlier. 

Silver futures fell this week, dropping 1.0 percent to $31.41 a troy ounce at today’s close. Miners, producers, jewelers and other commercial users were net-short 22,353 contracts, down 4,144 contracts, or 16 percent, from the previous week. 

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices. 

(Bloomberg) — Silver Holdings Heading for Biggest Monthly Drop Since October 
Silver holdings in exchange-traded funds backed by the metal dropped 0.5 percent this week and are headed for their biggest monthly decline since October.

Funds including iShares Silver Trust held 17,557.69 metric tons as of 5 p.m. today, down from 17,648.32 tons on April 20 and the biggest weekly decline since Feb. 17, according to data compiled by Bloomberg. The 1.1 percent decline this month would be the first this year and the biggest slide since October. 

(Bloomberg) — IShares Silver Trust Holdings Unchanged at 9,552 Metric Tons 
Silver holdings in the IShares Silver Trust, the biggest exchange-traded fund backed by silver, were unchanged at 9,552.14 metric tons as of April 27, according to figures on the company’s website.

================================================================================

                  April 27   April 26   April 25   April 24   April 23  April 20

                      2012       2012       2012       2012       2012      2012

================================================================================

Million Ounces     307.108    307.108    307.108    307.108    307.108   307.108

 Daily change            0          0          0          0          0-2,718,365

——————————————————————————–

Metric tons       9,552.14   9,552.14   9,552.14   9,552.14   9,552.14  9,552.14

 Daily change         0.00       0.00       0.00       0.00       0.00    -84.55

================================================================================

NOTE: Ounces are troy ounces.
SOURCE: iShares Silver Trust

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NEWS
Gold May Gain for Fifth Day, Set for Longest Rally Since January – Bloomberg

Gold near 2-week high on dollar, US GDP data – Reuters

Agnico CEO Says Gold `Middle of the Bull Market’ – Bloomberg

Europe’s Anti-Austerity Calls Mount as Elections Near – Bloomberg

COMMENTARY
McEwen, Crofton Debate Gold Standard Feasibility – Bloomberg

Do Central Banks Still Love Gold? – Resource Investor

Eric Sprott: "When Fundamentals No Longer Apply, Review the Fundamentals" – Zero Hedge

Gold’s Value Today – Azizonomics

Gold and Silver Disaggregated COT Report (DCOT) for April 27 – Got Gold Report

Stephen Flood

Stephen Flood is the CEO of GoldCore. He is a former Wall Street equity trader and FinTech expert. He has been involved in the precious metals markets since 2004 and has appeared as an expert contributor on CNBC, CNN, BBC, RTE & Bloomberg TV and has had articles published in the Irish Times, Irish Independent and The Sunday Business Post.

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