The bullion banks have covered more of their short positions in the gold market, plus a big surprise.
April 2 (King World News) – Alasdair Macleod out of London: Eric, it looks like the bullion banks are unlikely to close more of their shorts, if tonight’s Commitment of Traders report is any guide. The table below shows the position last Tuesday.
On the massive bear raid early this week, which drove the gold price down to $1680, the Swaps (bullion bank trading desks) only managed to close a net 3,392 contracts, less than the Producers/Merchants category. Let’s look at that in a moment while we concentrate on the bullion bank trading desks first.
BIG SURPRISE: Lowest Short Position Since 2019
The bullion banks’ net short position valued last Tuesday, when gold closed at $1685 was $20.36 billion, the lowest since July 2019. Given these inflationary times, they would obviously want to get this figure down further — to a level position if possible. But they can’t do that, because the other non-spec category used the price knockdown to close their shorts by 4.685 contracts. In other words, at these levels the mines are no longer hedging their production.
In the speculator categories, the Other Reported and Non Reportables reduced their net positions by 6,091 and 1,538 contracts respectively as April rolled off the board. But in the week since the previous COT report, they stood for delivery for 1,268 contracts. And on the following day stood for a further 16,868 contracts, taking up 56.4 tonnes in all…
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In summary, it looks like the bullion banks have recovered as much of their net shorts as they can and should now concentrate on managing their books in what appears to be a rising market. That means containing their short positions, and if new buyers emerge, they will have little option but to mark prices up to avoid selling into what is now a rising market.
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