Gold: bears have broken through the bottom of this year's net position

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

For the second week in a row, and for 3 weeks out of the last 4, large speculators (NON-COMMERCIAL) have decreased their net position to buy gold contracts by 24.6 thousand contracts, bringing it down to 91.2 thousand. This is the lowest net position since November 8, 2022, and is even lower than the current year's levels.

Hedger operators have been decreasing their net position for selling gold contracts for the past four weeks, with a total reduction of 22.9 thousand contracts, bringing the total to 112 thousand. This has been the case for three out of the last four weeks.

The number of open contracts decreased by 4.4 thousand, bringing the total to 431.2 thousand.

The ratio of the number of contracts to buy to the number of contracts to sell for the bullish index of large speculators decreased by 0.30 over the week, bringing it to 1.67.

The latest Gold COT report shows that bearish sentiment is on the rise. For the second week in a row, traders have been reducing their net position as prices increase. This has caused the net position to fall below the levels of March and become the lowest it has been in the past 11 months. Large funds have increased their sales by 15% over the week, while purchases have also decreased. If this trend continues, it could lead to a decrease in the price of gold.

COT reporting data is essential for medium to long term trading. Generally, large speculators, NON-COMMERCIAL (banks, investment funds) tend to follow the trend (blue line). On the other hand, small speculators, NONREPORTABLE POSITIONS, usually do not have much of an 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, while open interest is the total of all open positions in the market.