Did you know that when bears go into hibernation they can lose up to 30% of their body weight.
Following data on Friday that gold bears have increased their short position, despite a sharply rising gold price, it seems they are doubling down and perhaps hoping all will be fine after a period of hibernation... while risking similar losses.
The latest CFTC data suggests that large speculators have increased their net short position to 247 tonnes while large commercials have marginally increased their longs. If the market continues to rise, and the bears are forced to buy-back their loss-making position, then gold could rally very significantly from here … in the words of Bachman-Turner Overdrive … “you ain’t seen nothin yet”.
Meanwhile the extreme long positioning of the US dollar has been reduced and it only remains to see whether the gold bears are sufficiently resourced to hold out… their recent positioning suggests they are doubling up and hoping to hang on.
That said, in a crowded trade it only takes a few breaking rank and starting a short covering rally before it picks up momentum and a rout follows, with gold rising sharply to the upside.
In short, the bears are looking vulnerable.
Having cracked the important technical resistance at $1215 (the trendline back to 2005), gold bulls will be eyeing the 200 dma at $1278 with interest – this would for be a worthy target for bulls.
Bears typically hibernate for 7 months by going into a state called torpor – let’s just hope for them they don’t get an unexpected early call about funding their margins …
Whilst Sharps Pixley Ltd has used reasonable endeavours to ensure that the information provided by Sharps Pixley Ltd in the newsletters is accurate and up to date as at the time of issue, it reserves the right to make corrections and does not warrant that it is accurate or complete. News will change with time. Sharps Pixley Ltd hereby disclaims all liability to the maximum extent permitted by law in relation to the newsletters and does not give any warranties (including any statutory ones) in relation to the news. This is a free service and therefore you agree by receiving any newsletter(s) that this disclaimer is reasonable. Any copying, redistribution or republication of Sharps Pixley Ltd newsletter(s), or the content thereof, for commercial gain is strictly prohibited.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.