Sunday, June 11, 2017

Investors betting heavily on gold price going both up and down leading into next week's Fed FOMC meeting

In the latest Commitment of Traders (COT) report, investors speculating in the paper gold markets are putting down massive bets both for and against the gold price leading up to next week's Fed FOMC meeting that could determine the next move in interest rates.

Bullish speculators increased their gold bets by the largest amount on record. 
Speculators betting on a gold drop also made large increased to their own positions. 
Next week's major event is the FOMC meeting and conference and we expect that Janet Yellen will offer investors nothing unexpected. 
Asian gold demand has been subdued with a large rise in May Indian imports that we expect will fall in June as jewelers de-stock. 
With expectations of a lackluster Fed meeting, we see no reason to change our short-term position and we expect gold and silver to follow current momentum downwards next week. 
The latest Commitment of Traders (COT) report showed a week of speculators jumping into gold on both the long and the short side. On the long side, we saw a massive gross increase in speculative longs as traders added more than 50,000 contracts on the COT week - the largest increase in our records going back to 2006! 
Shorts were not sleeping either, as they increased their own positions for the week by more than 10,000 contracts. After a strong start to the week and a rise close to $1300, gold ended the week on a three-day losing streak and down around 1% on the week - which matched our call for last week. Silver followed gold down for the week with a drop a little under 2%. – Seeking Alpha

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