Gold: buyers should be careful
The Commodity Futures Trading Commission (CFTC) COT (Commitments of Traders) reports for the week ending on Tuesday, October 6th, were released by the CFTC.
Non-commercial large speculators increased their net buying position in gold for the second consecutive week, bringing it up to 165.8 thousand contracts - a 2.7 thousand contract increase from the lowest levels since March 14.
Hedgers (COMMERCIAL) increased their net sell position on gold contracts by 3,000 contracts to 187.7k for the second consecutive week.
The number of open contracts rose by 35.1 thousand, bringing the total to 483.2 thousand.
The ratio of the number of buy contracts to the number of sell contracts for the bullish index of large speculators decreased from 3.27 to 3.22 over the week, due to an increase in sales.
The COT data for gold has shown an increase in bullish sentiment, with traders slowing down their net position on rising prices. Last month, the net position reached its highest point, and large funds increased their purchases by 2% for the week. If this trend continues, it could lead to an increase in the price of the precious metal.
Large speculators were increasing their sales while the net position has been fluctuating in a sideways range for over a month, suggesting some uncertainty in the market. Some of these speculators were expecting further price drops.
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 influence 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.
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