Hedge funds are still bullish on gold, but the market is facing a tough environment – Low Calorie Diets Tips

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(Kitco News) – Though volatility has increased in recent days, market analysts say the gold market in general is waiting for a catalyst to push the precious metal out of its tight trading range.

The latest trading data from the Commodity Futures Trading Commission shows that hedge funds remain relatively neutral on gold, with no significant bullish or bearish positions. Analysts have said that gold remains caught in a tug-of-war between rising inflation and aggressive Federal Reserve rate hikes.

The Federal Reserve is on course to hike interest rates by 50 basis points later this week and make another similar move in July. However, inflation remains a major threat to the economy. The US consumer price index rose 8.6% for the year in May, a new 40-year high.

“The macro picture — with Fed and BOE rate hikes and the ECB’s dovish stance — should weigh on gold, but the inflation story may keep gold bears at bay,” said Marc Chandler, managing director of Bannockburn Global Forex, in a recent comment to Kitco News .

The CFTC’s disaggregated Commitments of Traders report for the week ended June 7 showed money managers increased their speculative gross long positions in Comex gold futures by 2,484 contracts to 115,215. At the same time, short positions decreased by 4,254 contracts to 57,684.

Gold’s net length now stands at 57,531 contracts, up 13% from the previous week. During the survey period, gold prices traded in a tight range either side of $1,850 an ounce.

Analysts at TD Securities have warned that gold prices could push lower and potentially retest support around $1,800 as there are still many “smug longs” in the market.

“Net length in the gold market remains pretty tacky, adding extra length and covering modest shorts. Indeed, as the Fed’s next steps have been well-telegraphed, the cohort of discretionary traders who have risen to prominence since the pandemic era are reluctant to be shaken amid mounting recession concerns as they step off the Fed’s uncharted path after September,” they said Analysts “While this momentum has kept gold prices firm in the face of a strong dollar and rising interest rates, we still believe the yellow metal will ultimately succumb to the Fed’s fight against inflation.”

Although the price of gold could trend down, many analysts remain optimistic that gold can rise over the long term. Doubts are growing that the Federal Reserve will get inflation under control.

Ole Hansen, Saxo Bank’s head of commodity strategy, said rising stagflation fears and further weakness in equity markets will continue to support gold prices.

“Gold is relatively flat for the year, but it continues to outperform equities, so I’m pleased with its performance,” he said. “The Federal Reserve is running out of time trying to get inflation under control. I don’t think they want to take the risk of pushing the economy into recession.”

Silver continues to attract investors, albeit at a relatively slow pace.

The disaggregated report showed that money-managed speculative gross long positions in Comex silver futures fell 334 contracts to 40,650. However, short positions also fell by 4,115 contracts to 33,818.

Silver positioning is net long at 6,832 contracts, up 132% from last week’s lows. Silver was trading around $22 an ounce during the survey period.

Although silver could struggle as a currency metal in gold’s shadow, some analysts have said industrial demand will continue to support prices.

As for industrial metals, hedge funds re-entered the copper market on a solid footing as demand from China continues to improve.

Copper’s disaggregated report showed that money-managed gross speculative long positions in high-grade Comex copper futures increased by 4,227 contracts to 44,270. At the same time, short positions decreased by 11,561 contracts to 40,154.

Speculative positioning in the copper market turned net bullish for the first time in five weeks. During the survey period, copper prices tested resistance below $4.50 a pound. Despite the new bullish momentum, commodity analysts at TD Securities are not convinced the trend is sustainable.

“Copper speculators have continued to add length, adding longs and aggressively covering short positions as optimism over Shanghai’s reopening fueled a strong rally in low-liquidity sessions. However, China’s reopening was old news,” the analysts said. “The base metals trading regime has turned into a sell-rally regime and we remain tactically short LME1m copper in this regard.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of the author Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article assume no responsibility for any loss and/or damage resulting from the use of this publication.

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