Speculative net long positions in gold raises sharply

Gold is continuing the price fall it began last Friday as the new week of trading gets underway and has dropped to around $1,170 per troy ounce. We attribute this to profit-taking after the price reached a four-month high of a good $1,190 just shortly beforehand, especially given that the price rise was driven largely by speculation, as the CFTC's data show. 

In the week to 13 October, net long positions in gold were expanded by 68% to 77,200 contracts, putting them at their highest level since mid-May. The gold price had climbed by a good $20 in the period under review and then continued its upswing in the following days. 

What is more, the gold ETFs tracked by Bloomberg recorded their sharpest daily outflow since early September on Friday, at 5.4 tons. Up 49% to 42,000 contracts, the increase in net long positions in silver was likewise considerable. 

This is equivalent to a purchase of around 2,150 tons. That said, the silver price hardly responded at all to this. The roughly 74 tons of outflows from silver ETFs during this period cannot explain this, notes Commerzbank.