Gold speculative long positions drop 20% in 5 weeks
The gold market has seen a notable retreat in speculative interest, according to recent Commitments of Traders (COT) data from the Commodity Futures Trading Commission (CFTC).
Over the past five weeks, speculative long positions have dropped 20% from 296,200 contracts on October 25 to just 236,500 as of November 22.
The retreat in speculative positioning was sharper than many anticipated. For example, the November 15 COT report projected 255,300 speculative long contracts, but the actual figure came in much lower at 236,500. This rapid unwinding suggests traders are scaling back bullish bets faster than expected, likely reflecting caution about gold’s ability to sustain higher levels.
What's weighing on gold is the dollar’s resilience, bolstered by expectations of prolonged higher interest rates. A strong greenback makes gold, a non-yielding asset, less attractive for investors. Additionally, with equity markets rallying and volatility subdued, gold’s safe-haven appeal has diminished, further discouraging speculative interest.
Gold prices hint at recovery but pressure persists
After sliding to a nine-week low at $2,540, gold prices have shown signs of recovery. Entering the new week, momentum during the Tokyo session pushed prices higher. However, the recovery now encounters stiff resistance near the $2,600 mark.
The consistent drop in speculative positions, coupled with the current price resistance near $2,600, raises questions about gold’s next move. Could this be the start of a broader recovery, or will the resistance cap further gains? Future price action will likely hinge on macroeconomic shifts, such as potential dovish signals from the Federal Reserve or an escalation in geopolitical tensions.
Gold marks its sharpest weekly decline in 2024. Investors and governments now weigh gold-Bitcoin pairing for portfolio diversification.
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