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Hedge Fund Push Bullish Gold Bets To 2-Year Highs – CFTC

(Kitco News) – The fear of escalating trade tensions evolving into a currency war pushed bullish gold bets to their highest level in almost two years, according to the latest Commodity Futures Trading Commission (CFTC) trading data.

Although analysts warn that the gold market appears to be significantly overbought, the growing stamp of fear continues to support prices currently trading for more than six years.

CFTC's Split Commitments of Traders report, for the week ending August. 6, showed that money managers increased their speculative gross long positions in Comex gold futures by 33,1[ads1]06 contracts to 248,687. At the same time, short games with 8,014 contracts fell to 21,854. Gold's net long positioning currently amounts to 226,833 contracts, an increase of 22% from last week.

During the IP, gold prices rose almost 3% as prices pushed to a six-year high. Analysts expect gold's net long positioning to push even higher as the gold price now trades at over $ 1500 an ounce the highest price since April 2013.

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

The latest trading data showed that gold's bullish sentiment is at its highest level since the end of September 2017.

“This is making gold vulnerable to gains, although we see no reason for investors to make profits in the current market environment, say Commerzbank analysts.

Analysts at TD Securities noted that investors began to pile in gold galore after US President Donald Trump threatened to implement a 10% tariff on another $ 300 billion in imported Chinese goods. In return, the Chinese central bank let the yuan fall below 7 for the first time in more than a decade.

The analysts added that the latest salvo in the US-China trade war heightens today's fears of a significant global economic downturn, prompting investors to predict more interest rate cuts than the Fed currently expects.

"With the trade war boiling, rather than simmering, the market has begun to price a heavy series of cuts for next year to see gold rise to several years of highs," the analysts said.

Even at the high price of gold, analysts at MKS PAMP Group said they expect to see the market continue to rally and see a $ 1,520 price target in the short term.

"Expect the yellow metal to continue to build momentum when US-China trade tensions show no signs of slowing in the short term, while global growth problems and the central bank's easing cycles provide additional fuel in the recent times," analysts said.

Disclaimer: The views expressed in this article are by the author and may not reflect those of 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 a challenge to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept damages for losses and / or damages resulting from the use of this publication.

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