Gold 1 OZ (XAU=X) large speculators upped their bullish positioning

Gold 1 OZ (XAU=X) large speculators upped their bullish positioning

Gold 1 OZ (XAU=X) large speculators upped their bullish positioning

Large speculators upped their bullish positioning in gold futures – although likely only temporarily — during the most recent reporting week for data compiled by the Commodity Futures Trading Commission.

However, these accounts may well have cut their bullish posture since then, as gold prices have shed more than $20 an ounce since the April 9 cutoff date for the last CFTC report, analysts said.

During the week-long period covered by the data, Comex June gold rose to $12.90 to $1,308.30 an ounce, while May silver climbed 15 cents to $15.211.

Net long or short positioning in the CFTC data reflect the difference between the total number of bullish (long) and bearish (short) contracts. Traders monitor the data to gauge the general mood of speculators, although excessively high or low numbers are viewed by many as signs of overbought or oversold markets that may be ripe for price corrections.

The commission issues two reports each Friday — a so-called “legacy” report and a “disaggregated” report, started a decade ago and meant to offer more detail.

The disaggregated report showed that money managers hiked their net-long position to 37,037 futures contracts in the week to April 9, up from 24,618 the prior week. The increase occurred due to both fresh buying (an increase of 7,101 gross longs) and short covering (as reflected by a decline of 5,318 total shorts).

“Funds were probably looking at the Federal Reserve being more accommodative,” said Phil Flynn, senior market analyst with Price Futures Group.

That would prompt expectations for a softer U.S. dollar and as a result, help prop up gold, he continued.

“Following a corrective USD [U.S. dollar] trend, stronger gold prices … prompted money managers to load up,” said TD Securities. “Specs aggressively grew their long exposure as they expected the Fed to stress their dovish bias in the FOMC [Federal Open Market Committee] minutes, and in reaction to the previous week’s lackluster equity performance. The move above $1,300/oz also prompted short covering, which further increased length.”

Since the cutoff for the last CFTC report, however, gold has fallen back below $1,300 an ounce amid increased risk sentiment. This means investors since have likely reduced their long exposure to gold, TDS added.

Meanwhile, in silver, the funds increased their net-short position slightly to 2,532 futures contracts from 1,724 the week before. This occurred as the amount of long liquidation (decline of 2,573 total longs) outpaced the short covering (decline of 1,765 gross shorts).

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1,309.67.

The projected lower bound is: 1,264.49.

The projected closing price is: 1,287.08.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 19.2596. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 2 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 42.30. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 37 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -93. This is not a topping or bottoming area. The last signal was a buy 8 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 0 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed down -2.434 at 1,287.566. Volume was 8,900% above average (trending) and Bollinger Bands were 16% narrower than normal.

Open High Low Close Volume___
1,290.2001,291.7641,281.9601,287.566 19,635

Technical Outlook
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 1,294.46 1,305.84 1,249.86
Volatility: 9 11 11
Volume: 1,964 393 98

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

PREC.M.XAU= is currently 3.0% above its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume out of XAU= (bearish). Our trend forecasting oscillators are currently bearish on XAU= and have had this outlook for the last 12 periods.

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