Speculators are lowering their bets on the growth of gold
Watching a regular COT report can sometimes tell you how big players are currently thinking about the further development of some commodities. A COT report released on Friday showed that big speculators on gold have started to bet less on further gold growth, and the stagnant price suggests that another US fiscal stimulus may not help gold with growth. Gold is just over $ 1,900 an ounce at the beginning of the week.
Contracts on futures markets from non-commercial entities fell by 7,916 from last week to 240,671 contracts. Total contracts last week grew to less than 327,000 per week, while long contracts grew by 6,064, but short contracts grew by almost 14,000.
Overall, the market is dominated by entities expecting a decline in gold, which can be explained by the recent rise in the US dollar or the inability of the US government to deliver the fiscal package.
Overall, gold speculators have reduced their long positions for the first time in the last 3 weeks. In the last 2 weeks, short positions have also grown by 30,000 contracts, rising to 10-week highs. Despite the slump this week, long positions remain above 200,000 contracts for over seventy weeks, suggesting that speculators have been holding positions for a long time since 2019 and positions have not sold out significantly.
Chart: COT contracts of large traders (Source: countingpips.com)