Record-high speculative net short positions in gold

Precious metals made a noticeable recovery late Friday and are defending their gains as the new week of trading begins. Gold is trading at around $1,100 per troy ounce and €1,000 per troy ounce. 

As the CFTC's statistics on the positioning of speculative market participants reveals, the gold price slide at the beginning of last week was driven largely by speculation, money managers having expanded their net short positions in gold to 13,600 contracts in the week to 21 July. 

This is their highest level since the data series began in June 2006. The gold price dropped by nearly 5% in the period under review, no doubt mainly as a result of precisely this group of investors. Since the price has fallen further since the reporting date, net short positions are meanwhile likely to be even higher. 

"The high degree of pessimism shown by speculative financial investors will probably preclude any significant recovery of gold and silver prices in the short term. The current weakness of precious metal prices is regarded as exaggerated and it is expected to see higher prices by year's end", says Comerzbank.

The latest weakness of platinum and palladium prices cannot be explained by the actions of speculative financial investors, net long positions here were reduced only slightly in the week to 21 July.