Gold: traders reverse net position from 1.5-year tops

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 decreased their net position to buy gold contracts by 15.3 thousand contracts, bringing it down to 188.2 thousand. This follows a period of 7 weeks in which the net position had been increasing. The net position has been decreasing since April 26, 2022, when it reached its peak.

Hedger operators decreased their net position to sell gold contracts by 14.1 thousand contracts, bringing the total to 212.8 thousand. This marks a decrease in the net position to sell after a period of nearly 8 weeks of accumulation.

The number of open contracts decreased by 17.5 thousand, bringing the total to 469.9 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 0.18 over the week, bringing it to 3.21.

Data from the Gold COT report suggests that bearish sentiment is on the rise. After two months of accumulation, traders have started to reduce their net position on rising prices. This has caused the net position to drop from its highest level in over a year and a half. Large speculators have decreased their purchases by 5% in the past week. If this trend continues, it could lead to a decrease in gold prices.

It is advisable to wait for the data of the next report, which will be released in a week, to affirm the reversal of the net position.

COT reporting data is essential for medium to long term trading. Large speculators, NON-COMMERCIAL (banks, investment funds) usually trade in line with the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, generally do not have a major 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.