Gold: bulls reversed net position from yearly bottom

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 increased their net position to buy gold contracts by 41.3 thousand contracts, bringing the total to 112.7 thousand. This was a reversal of the 3-week reduction in net position, and the net position has been growing from its minimum levels since November 1, 2022.

Operator hedgers increased their net position to sell gold contracts by 37.6 thousand contracts, bringing the total to 128 thousand after a 3-week reduction.

The open interest rose by 3.1 thousand contracts, bringing the total to 439.6 thousand.

The ratio of the number of contracts to buy to the number of contracts to sell for the bullish index of large speculators rose by 0.47 to 1.95 over the course of the week.

The latest Gold COT report indicates a strong shift in sentiment towards bullishness. After three weeks of contraction, traders have significantly increased their net position on rising prices. This growth has come from levels that were minimal over the past year. Large funds have reduced their sales by 20% over the week, while purchases have also been increased. If this trend continues, it could lead to a further rise 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 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.