Speculators Buying Up Precious Metals Futures: CFTC Posted by Adam King on February 11, 2013
According to U.S. government data, speculators returned as buyers in precious and base metals futures and options traded on the Comex division of the New York Mercantile Exchange, triggered in part by a rise in prices, according to Forbes.
Prices of precious metals have experienced a rally since the beginning of the year, though current market prices have been seeing strong resistance on the upside trends. Despite those market fundamentals, U.S. Mint bullion in the form of gold and silver coins have been selling at record levels, indicated different dynamics when viewing precious metals in terms of the future. The Mint suspended orders of silver bullion due to record demand. Gold coins have also been ordered in record amounts, a trend that continues through the last week, according to figures from the U.S. Mint.
Speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report pushed net-long positions in the platinum group metals highs. Funds bolstered net-long positions in copper on thoughts of a strong economic outlook. Increases in speculators net-long positions in gold and silver also increased.
During the timeframe the data reflected, prices were firmer across the board. The week up until February 5 showed Comex April gold gaining $10.80 to $1,673.50 per troy ounce as March silver gained 69.10 cents to $31.875 per troy ounce. Nymex April platinum gained $28.30 to $1,707.20 per troy ounce during the week as March palladium gained $15.70 to $765.45 per troy ounce.
The previous report indicated positions were being slashed as managed-money accounts gained exposure to gold futures and options in the disaggregated report, increasing net-long positions to 86,926. Managed-money accounts added 4,807 gross longs and cut 38 gross shorts.
Market watchers said the modest increases in the speculative net-long positions in this report reflects the action of the gold market lately, meaning participants are waiting to put on big positions in a market that has yet to show a more clear direction.
The legacy report showed a different dynamic as non-commercials increased net-long positions sharply, adding 13,623 gross longs and 198 gross shorts. They are now net-long 144,495 contracts. The jump in net-long positions, however, does not make up for the heavy drop observed in the previous week’s report.
Barclays noted that fund length as a percentage of open interest has risen to 32 percent but gross short positions are at their highest since July 2012, posing the potential for a short-covering rally, should macro data worsen.
Net-long positions in silver for the money-managed accounts also rose, though by 29,628 contracts.
Commerzbank said net long positions in silver, platinum and palladium were also increased slightly further, which expresses how optimistic market players currently are about the more cyclical precious metals in particular, which are predominantly used in industry.