Gold: bulls and bears are in a tug-of-war

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

For the past three weeks, large speculators (NON-COMMERCIAL) have decreased their net position to purchase gold contracts by 19.3 thousand contracts, bringing the total to 115.8 thousand. This is the lowest net position since August 22.

Hedger operators have been decreasing their net position for selling gold contracts over the past few weeks, with a total reduction of 18.1 thousand contracts to 134.8 thousand. This is the third consecutive week that the net position has been reduced.

The number of open contracts decreased by 2.5 thousand, bringing the total to 435.6 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 0.35 over the week, bringing it to 1.97.

Data from the Gold COT report indicates a growing bearish sentiment. After a week-long hiatus, traders resumed decreasing their net position as prices rose. This resulted in the net position reaching its lowest point in the past month. Large funds increased their sales by 17% over the week, while purchases were also reduced. If this trend continues, it could lead to a decrease in the price of gold.

For the past four weeks, the net position has been fluctuating between growth and decline, indicating some uncertainty in the market as it moves in a slightly inclined sideways range.

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 impact 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.