Last Week Speculative Gold Shorts Did Something They Have Never Done Before

Summary

• Speculative gold short positions declined by more than 34,000 contracts.
• Speculative long positions increased by a mediocre 11,000 contracts.
• Last week's Fed meeting continued to drive gold and silver higher despite what we perceived as a hawkish statement.
• Current positioning for the COT report remains firmly in historical bullish territory.
• Despite this we are bearish on gold for the upcoming week due to a number of headwinds outside the COT.

The latest Commitment of Traders (COT) report, which was published BEFORE the recent Fed decision, shows a massive drop in speculative shorts – the biggest in the report’s history back to 2006! Speculative longs did increase their own positions, but by nowhere near the same amount that shorts covered. Silver also saw a good amount of covering, but nowhere near the amount that was seen in gold.

Since this data was dated to Tuesday, before the Fed decision, we expect it to be even more bullish as gold and silver continued to rise post-meeting and sit around 1% higher.

The big economic event next week is Friday’s Non-farm Payrolls report, which should be very important to help determine the Fed direction for both interest rates and balance sheet unwinding. Additionally, we have the non-economic drama that is taking place in Washington as President Trump is expected to sign a Russian sanctions bill overwhelmingly approved by Congress (Russia is expected to respond) and the drama of his internal shakeup continues. Not particularly US Dollar inspiring material…

Last week we did the first survey of our readers and it turns out they were right with their bullish call.

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