Analyzing Future Positions in Gold
CFTC future positions
According to the data by the CFTC (Commodity Futures Trading Commission) on Friday, September 29, large speculators have cut down their bullish net positions in gold futures. Speculative positions have dropped sharply over the past two weeks—a fall of more than 42,000 contracts, after rising for the previous eight weeks.
Non-commercial futures contracts, which are traded by large speculators and hedge funds, totaled a net position of ~213,000 contracts in the data reported through Tuesday, September 26. This represents a weekly drop of almost 24,000 contracts from the previous week’s total of ~236,000 net contracts.
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Commercial traders, or those categorized as hedgers or traders who buy and sell for business purposes, witnessed a weekly gain of nearly 20,000 contracts.
Notably, gold sentiment had been positive for the past few months due to global unrest stemming from North Korea. Turbulence among markets often gives a bounce to precious metals because they are considered safe-haven assets. But the September meeting of the US Federal Reserve indicated another rate hike later this year, which pulled precious metals lower, as they don’t bear any intermediary cash flows.
The recent fall in precious metals was also seen in popular funds like the iShares Gold Trust (IAU) and the iShares Silver Trust (SLV), which have fallen 3.2% and 5.5%, respectively, on a 30-day trailing basis. Among the mining shares that joined the slump were Barrick Gold (ABX), Harmony Gold (HMY), Iamgold (IAG), and Sibanye Gold (SBGL).