Gold: bulls can organize a counterattack

The Commodity Futures Trading Commission (CFTC) COT (Commitments of Traders) reports for the week ending on Tuesday last week showed:

Non-commercial large speculators decreased their net buying position in gold by 19.2 thousand contracts to 101.9 thousand, marking the fifth consecutive week of reduced net buying. This is the lowest net position since March 7th.

Hedgers (COMMERCIAL) decreased their net selling position in gold by 20.9k contracts, bringing it down to 121k. This marks the fifth consecutive week that hedger operators have reduced their net selling position.

The number of open contracts decreased by 3.4 thousand, bringing the total to 430.2 thousand.

The ratio of the number of buy contracts to the number of sell contracts for the bullish index of large speculators decreased by 0.26 over the week, bringing it to 1.82.

The latest Gold COT data indicates a bearish sentiment among traders. For over a month, they have been decreasing their net position as prices have risen. This has resulted in the net position reaching its lowest level in the past 5.5 months. Large funds have further contributed to this trend by increasing their sales by 11% in a week, while also reducing their purchases. If this trend continues, it could lead to a decrease in the price of gold.

The net position is near the lows of early March, which then sparked a rally. The bulls may attempt to launch a counterattack.

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COT report data is essential for medium and long-term trading, and is mainly used by large speculators, NON-COMMERCIAL (banks, investment funds). These traders usually follow the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, however, have little impact on the market (red line). Hedgers, COMMERCIAL (operators, large companies) usually go 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.