What Traders and ETF Investors Indicate for Gold’s Movement



The COT report

The CFTC (Commodity Futures Trading Commission) reports the position of major players in the futures market through its COT (Commitment of Traders) report. This report specifies the positioning of various players in the market. It is released every Friday and shows the open interest recorded on the previous Tuesday.

According to the COT report for the week ended June 12, speculators increased their long positions in gold by ~4,000 contracts. The shorts, on the other hand, cut their gold (GLD) positions for the second consecutive week. 

These positions were for the week ended June 12, which was before the Federal Reserve announced an interest rate hike of 25 basis points. The Fed signaled two more hikes in 2018 for a total of four hikes for the year. Investors should also note that Ray Dalio and John Paulson are still betting on gold.

ETF holdings

However, ETF investors have sold about 36 tons of gold in June so far, which is the largest pace of the sell-off in holdings since July 2017. Year-to-date, ETF investors are net buyers of ~17 tons of gold.

The inflows and outflows in gold ETF holdings are an important part in overall gold demand and gold prices. ETF holdings are not surging despite weaker gold prices, which could be due to investors’ wait-and-see stance on drivers such as geopolitical tensions and trade war concerns. 

Until then, negative sentiment could be detrimental for gold prices (GLD) and equities like Franco-Nevada (FNV), Newmont Mining (NEM), Goldcorp (GG), and Royal Gold (RGLD).

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