FOCUS: Speculators Add To Longs In Gold, Cut Positions In Silver – CFTC

13 December 2010, 11:05 a.m.
By Debbie Carlson
Of Kitco News
http://www.kitco.com/

(Kitco News) - Speculators returned to gold as the prices ran up to all-time highs last week; however, the same wasn’t true in silver as prices were lifted by speculators covering short positions rather than establishing new longs, according to government data.


The weekly report from the Commodity Futures Trading Commission showed increases in net-long gold positions in both its legacy and disaggregated commitment of traders reports, futures and options combined. The report data is as of Dec. 7.


During the timeframe of Dec. 1-7, prices rose. Gold prices for the February contract on the Comex division of the New York Mercantile Exchange gained $20.70 an ounce and settled on Dec. 7 at $1,409. March silver gained $1.364 an ounce, settling at $29.777.


Managed-money accounts in gold increased their net-long position to 183,737 contracts, with an increase in gross longs. Gross shorts rose slightly. The producer category saw longs cut and shorts rise, hiking the net-short position. Swap dealers cut positions from both sides, but cut more gross shorts, lowering the net-short position.




The non-commercial, or funds, in the legacy report saw their net-long position rise to 251,428 contracts as they added gross longs and cut gross shorts. Commercials significantly increased their net-short position through a large hike in the gross shorts.


Barclays noted that this was the third week in a row that the net fund length for gold rose. They said the gain came as new long positions were established. “Positions as a percentage of open interest have risen to 39%,” they said.

The question, though, is whether those new long positions were kept as gold prices decayed from that point forward, with gold prices settling at $1,384.90 by Friday.

In silver, managed-money accounts saw their net-long position decrease slightly, as funds cut gross longs and added to gross shorts. They are now net-long 26,240. Producers cut exposure on both sides, but trimmed more shorts, leaving them with a reduced net-short position. Swap dealers saw gross longs cut slightly and gross shorts increase, lifting the net-short position.


For the legacy report, silver non-commercial positions saw a drop in the net-long position to 33,937 contracts. While an increase in gross longs and shorts were reported, there were more gross shorts added, resulting in the drop in the net-long position. Commercial increased both gross longs and shorts, but added more gross longs, meaning that their net-short position fell.


Barclays credits the drop in the net-long position in a week that silver prices rose as a sign that short-covering was behind the gain in prices. The short-covering in silver futures is at odds with the long-term investor, as judged by the rise in holdings in the silver exchange-traded funds, they add.


In palladium, the net-long position for managed-money accounts rose, but only because more gross shorts were cut than gross longs. The net-long position is 12,341, a modest increase from the previous week. In the legacy report, the net-long position for funds decreased minutely, to 14,341 contracts as slightly more gross shorts were added than gross longs.


For platinum, net-longs for managed-money accounts increased to 20,953 contracts, as they added longs and cut shorts. Non-commercials saw their net-long position increase to 24,054 contracts as they added longs and cut shorts.


In copper, managed-money accounts are net-long 32,657 contracts a rise from the previous period, as these accounts added longs and cut shorts. In the legacy report, copper fund net-long position rose as the non-commercial gross long increased sharply, bringing the net-long position to 26,433 contracts.