Gold: traders are trying to reverse the net position

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

After a weekly decline, large speculators (NON-COMMERCIAL) increased their net buying position in gold by 11.2k contracts, bringing it up to 163.1k. This is the first time the net position has grown from its minimum levels since March 14.

After a weekly decline, hedger operators (COMMERCIAL) increased their net sell position in gold by 9.4k contracts to 184.7k.

The number of open contracts rose by 16.2 thousand to a total of 448.1 thousand.

The ratio of the number of buy contracts to the number of sell contracts for the bullish index of large speculators increased by 0.07 over the week, reaching a total of 3.27.

Gold's Commitment of Traders (COT) data is showing bullish growth, as traders are attempting to increase their net position on rising prices after reducing it intermittently since the start of May. The net position has started to grow from levels that were very low over the past 3.5 months. Large funds have increased their purchases by 6% in the last week. If this trend continues, it could lead to an increase in the price of the precious metal.

For the past six weeks, the net position has been fluctuating without any clear direction, suggesting a lack of confidence in the market.

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.