Money managers boosted gold prices at the end of 2014 mostly by closing out their short positions according to data from the Commodity Futures Trading Commission.
According to the commitment of traders disaggregated report, for the week ending Dec. 30, managed money long positions of Comex gold futures, increased by 1,869 contracts to 136,562. At the same time short positions fell by 3,423 contracts to 38,171. Gold’s net long position now stands 98,391 contracts.
During the holiday trading season, Comex February gold futures pushed rallied from $1,176.80 to $1,200.40 an ounce, a rise of 2% during the report’s survey period.
Bart Melek, head of commodity strategy at TD Securities, said that long traders are starting to enter the marketplace and that trend has probably picked up momentum this week as uncertainty in the eurozone has created some safe haven demand.
“The 10-year yield has collapsed all the way down to 1.94%; real yields are dropping like a stock and the opportunity costs of holding gold is becoming a little bit better,” he said.
Melek added with all the uncertainty in the global marketplace, investors might start pricing in less tightening from the Federal Reserve later in the year.
Year-end short covering was even more noticeable in the silver market. The CFTC reported that managed money long positions in silver increased by 454 contracts to 38,857; however short positions fell by 1,685 contracts to 21,806. Silver’s net long position now stands at 17,051 contracts.
During the survey period Comex March silver futures rallied from an opening price of $15.775 and to close Dec. 30 at $16.276 an ounce, a gain of more than 3%.
Analysts at the Bank of American Merrill Lynch said that silver’s net long position is at a three-month high; however, they remain bearish on silver as it remains below resistance between $16.56 and $16.68 an ounce.
Courtesy: Kitco News
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