A price rebound for metals across the board encouraged speculators to start to rebuild bullish positions in precious metals futures and options, according to U.S. government data released Friday.
All precious metals contracts traded on the Comex division of the New York Mercantile Exchange and the Nymex saw net long positions for speculators rise in both the legacy and disaggregated weekly commitment of traders reports. These were released by the U.S. Commodity Futures Trading Commission for the week ended Aug 21. Speculators' net short positions in copper were reduced.
For the time frame measured, the most-active December gold contract rallied $40.50 to $1,642.90 an ounce as of Aug. 21. September silver gained $1.665 during the week to $29.428, October platinum rose $108.70 to $1,507.80 and September palladium gained $45.80 to $624.20. September copper rallied 9.4 cents to $3.4530 a pound.
Managed-money accounts significantly increased their net long position in gold on a combination of new buying and short covering. They added 18,941 gross longs and cut 9,626 gross shorts, raising the net long position to 110,623 contracts. Producers and swap dealers cut gross longs and added many gross shorts, boosting their net short positions.
Non-commercials in the gold legacy report saw similar action, adding 14,990 gross longs and trimming 6,911 gross shorts, raising the net long position to 140,126 contracts.
Commercials cut gross longs and added a number of gross shorts, which hiked their net short position.
HSBC noted the sharp rise in the net long positions for the disaggregated and legacy reports pushed speculators' gold net longs "to levels not seen since early May."
Barclays Capital noted the gross short positions in gold are now at their lowest since May, but around their long-term average. Gross long positions are above their long-term average, but far off their peak. For gold prices to rally further, it needs to attract investor support considering physical demand has been light.
"The 2012 Jackson Hole Symposium on Friday will be key for gold ahead of the next U.S. employment report and FOMC meeting in September as the market looks for signals for further stimulus. If the market is disappointed, in line with our base-case scenario, gold prices are likely to lose steam quickly given how quickly prices have responded to QE (quantitative easing) expectations this year," Barclays said.
In the silver disaggregated report, speculators increased gross longs by 3,133 contracts and sliced gross shorts by 3,744 contracts, raising their net long to 17,452 contracts. Producers cut gross longs and added gross shorts, raising their net short position, while swap dealers lowered their net long position by cutting gross longs and adding gross shorts contracts.
In the legacy report, non-commercial traders added 3,562 gross longs and cut 2,943 gross shorts, lifting the net long position to 22,204 contracts. Commercials raised their net short by adding gross shorts and subtracting gross longs.
In the platinum group metals, funds increased their net long positions in both platinum and palladium by adding to gross longs and cutting gross shorts. In platinum, managed-money accounts lifted their net long to 15,365 contracts. In palladium, managed-money accounts increased their net long to 5,120 contracts.
In the legacy report, non-commercial platinum traders lifted their net long position to 26,056 contracts. Similar action was seen in palladium as the non-commercial traders' net long position rose to 7,060 contracts.
TD Securities said worries about labor unrest and a possible political crisis in South Africa pushed speculators into buying long platinum and palladium positions while "aggressively" covering platinum shorts.
Funds reduced their net short copper exposure following rises in recent weeks. In the disaggregated report speculators added gross 3,056 longs and cut 4,495 gross shorts, which narrowed the net short position to 3,224 contracts. In the legacy report, speculators added 1,899 gross longs and cut 3,000 gross shorts reducing their net short position to 12,882 contracts.
For a more detailed breakdown, please visit the CFTC website: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm