Gold price rises after turbulent trading week

Gold price on the upswing

The price of gold is on the upswing again. And this despite the fact that economic data from the USA initially turned out better than expected and were therefore not particularly conducive to price rises for gold and silver. Initially, expectations of a further cut in US interest rates this year fell after the Fed delivered on Wednesday evening and the US economic growth figures and new US labour market data turned out better than expected. However, the ISM Purchasing Managers Index on Friday afternoon fell short of expectations, signaling a third consecutive month of US economic slowdown at 48.3.

 

Latest CoT Data

Let’s look at the COT data from trading in gold futures on the US commodity futures exchange COMEX as of 29 October 2019. The net short position of the “Commercials” rose by almost 2 percent to 301,216 contracts. What about the sub-groups? While the actual gold users (“Prod/Merch/Proc/User”) reduced their hedging against lower prices below the line (-3.9%), the net sales of the “swap dealers” (including major banks) rose by 7.7%. On the other hand, the net long position of the “big speculators” rose by 6.7 percent to 276,515 contracts. This group of traders was as optimistic about gold prices as it had been at the end of September. Managed money (hedge funds, investment companies) increased their net purchases by 7.6 percent to 198,558 contracts.

 

Gold market strength

Open Interest, i.e. the sum of all open gold contracts on COMEX, rose by 2.86 percent to 643,442 contracts compared to the previous week. By the close of trading yesterday, Friday, it had risen sharply by 6 percent to 683,246 contracts.

 

The gold price rose by 2.5 percent last week to 1,514 US dollars per ounce (FOREX). Rising open interest with rising gold prices is a sign of market strength, as traders are prepared to enter futures trading with new positions when prices rise.