Gold: Are traders ready for a net position reversal?

The Commodity Futures Trading Commission (CFTC) reported, for the week ending last Tuesday, that the Commitments of Traders (COT) reports showed.

Non-commercial large speculators have been increasing their net position to purchase gold contracts for the past four weeks, with the most recent figure of 166.2 thousand contracts being the highest since July 25. This is an increase of 2.8 thousand contracts from the previous week.

Hedgers (COMMERCIAL) increased their net position to sell gold contracts for the fourth consecutive week, bringing the total to 186.1 thousand contracts, a 3.4 thousand contract increase.

The number of open contracts rose by 8.5 thousand to reach 484.3 thousand.

The ratio of the number of contracts to buy to the number of contracts to sell for the bullish index of large speculators rose by 0.07 over the week, reaching a total of 2.74.

Data from the Gold COT report indicates that traders are becoming more bullish on gold prices. For almost a month, net positions have been increasing from lows not seen in almost a year. Over the past 3.5 months, the net position has reached new highs. Large funds decreased sales by 2% for the week, while purchases were also increased. If this trend continues, it could lead to a rise in gold prices.

The net position's growth rate has significantly decreased, which could be an indication of its reversal in the near future.

The most recent COT report was postponed due to US holidays. COT reporting data is essential and is mainly used for medium to long-term trading. Generally, large speculators, NON-COMMERCIAL (banks, investment funds) trade in the same direction as the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, however, usually do not have a major effect on the market (red line). Hedgers, COMMERCIAL (operators, large companies) usually trade against the trend (black line). The net position is the difference between the number of buy and sell contracts. Open interest is the total of all open positions in the market.