Gold speculators used the sell-off as an opportunity to increase length - TD Securities


"After reaching a low of $1,160/oz, gold specs used the sell-off as an opportunity to increase length, adding more long positions in comparison to shorts," TD Securities analysts note.

Key quotes

"With the US dollar off the highs, along with stability in China and other emerging markets supporting prices, investors were convinced to reduce their net short exposure to the yellow metal. Furthermore, it is likely shorts started to cover as gold broke back above $1,200/oz to end the week amid Powell's Jackson Hole speech, which mentioned that the Fed is not seeing any signs of inflation overheating."

"Copper specs flipped to a net short position this week after another reduction in longs outweighed short covering. But, it is likely traders have called a bottom in the red metal after last week's capitulation, as low level talks between the US and China kicked off and emerging markets stabilized. In addition to risk sentiment, fundamentals have also been tightening as inventories draw in both LME and SHFE warehouses, with inventories in China falling nearly 50% since July. Given the elevated short positioning, any progress towards a trade deal could very well send copper materially higher as the year comes to an end."

"WTI crude specs decrease positioning after getting caught up in the risk-off markets last week. Length should return though, as prices bounced off the 200dma support of $64.39/bbl, attracting technical buying, while macro funds also regained appetite as trade tensions eased and a combination of global supply risks and tightening inventories suggested prices were too low. Our proprietary CTA position estimates also signaled that upward momentum generated from the shifting sentiment attracted additional trend following length. We expect crude to remain supported near the upper bound as tighter fundamentals and low spare capacity keep investors interested."

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex News

Editors’ Picks

EUR/USD breaks above 1.1100 amid EU hopes, US-Sino tensiosn

EUR/USD has hit a new two-month high above 1.11, amid hopes for a fiscal boost in Europe, and as growing Sino-American tensions seem to weigh on the dollar for a change. EZ inflation, US data, Trump's China speech, and end-of-month flows are in play.

EUR/USD News

GBP/USD advances amid US dollar weakness, shrugging off concerns

GBP/USD is trading above 1.23, edging higher amid US dollar weakness and Britain's gradual reopening. Intensifying Sino-American tensions and the Brexit impasse are ignored. 

GBP/USD News

Forex Today: Dollar dives, decoupling from stumbling stocks ahead of Trump's Chinese announcement

The US dollar remains on the back foot, with EUR/USD topping 1.11, despite a worsening market mood related to Sno-American relations. President Donald Trump will announce actions against China following Beijing's tightening of its grip on Hong Kong. 

Read more

Gold pokes $1,721/23 resistance area

Gold prices extend the latest recovery from $1,711 as DXY refreshes two-month low. A confluence of 10-day EMA, nine-day-old falling trend line probes immediate upside. An ascending trend line from April 21 favors the bulls.

Gold News

WTI struggles to cheer USD weakness, drops 1.40% in Asia

WTI probes gradual declines from $34.34, still eyes record monthly advances. DXY bears the burden of risk aversion wave before US President Trump’s China conference. Fears of US-China restrict the black gold’s near-term upside.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures