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(Kitco News) – Hedge funds and gold investors have significantly reduced their bullish exposure to gold, as the precious metal continues to be pressured by a stronger US dollar and increased bond yields, according to the latest data from the Commodity Futures Trading Commission CFTC).
The CFTC’s Disaggregated Trader Commitments report for the week ended January 12 showed that money managers decreased their speculative gross long positions in Comex gold futures by 36,039 contracts, to 131,057. At the same time, short positions increased by 2,296 contracts to 52,823.
“Gold saw a dramatic reduction in long liquids after speculators were frightened by rising 10-year bond yields above 1% and a stronger dollar,” said Ole Hansen, head of commodity strategy at Saxo Bank.
The net length of gold is now 78,234 contracts, down more than 36% from the previous week. The best in gold fell to its lowest level since May 2019, according to the report.
The significant drop in speculative interest rates dragged gold prices dramatically below $ 1,850 an ounce during the survey period.
According to some analysts, aggressive sales in the gold market may continue. While long-term conditions remain bullish for gold, analysts at TD Securities said on Friday that falling speculative interest rates could weigh on the precious metal.
“Looking ahead, gold is likely to remain under pressure until weakness in the real economy causes the market to recede in its optimism – which in our view may be happening soon,” analysts said.
However, some analysts also see a silver lining in the market, as investment demand for gold-backed exchange-traded products has increased as speculators liquidate their long positions.
“ETF investors seem to be looking at the lower price as a good buying opportunity,” said Carston Fritsch, a precious metals analyst at Commerzbank. “According to Bloomberg, ETF holdings increased by almost 17 tonnes on Friday. Almost the entire entry was attributed to the SPDR Gold Trust, which is used primarily by institutional investors.”
Although investors have fled the gold market aggressively, the silver market appears to be holding back.
The disaggregated report showed that speculative gross long positions managed by cash in Comex silver futures fell 3,485 contracts, to 69,805. At the same time, short positions increased 461 contracts to 27,861.
The net length of silver is currently 41,944 contracts, down 8.5% from the previous week. The net length of silver is at its lowest level since late November.
During the survey period, silver prices were able to maintain support above $ 25 an ounce.
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