Speculators cut net-long positions on gold again, bet on silver decline
Gold futures eased slightly on Monday against the backdrop of a stronger dollar, as the metal took a breather after an advance in the prior session of more than $20 an ounce following a weak monthly U.S. jobs report.
Gold for June delivery GCM3 -0.35% fell 60 cents to $1,575.30 on the Comex division of the New York Mercantile Exchange, as U.S. trading got underway.
Gold finished Friday’s session up $23.50, or 1.5%, at $1,575.90 an ounce after the U.S. Labor Department said the economy created 88,000 new jobs in March. That result was sharply lower than the 190,000 new jobs economists polled by MarketWatch had expected.
“Gold was a major beneficiary of this data, as the lower-than-expected jobs numbers saw a slight jump back into safe havens,” IG Markets strategist Evan Lucas said in a note to clients Sunday.
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Gold was straddling the fence of a weaker dollar and firmer euro on Monday.
The yen fell against both the dollar and the euro as an ambitious bond-buying program got underway in Japan. The single currency also rose against the dollar EURUSD +0.33% .
A weaker dollar tends to push dollar-denominated prices of commodities such as gold higher as them makes it less expensive to holders of other currencies.
Gold, which bounced off a 10-month low last week, narrowed its weekly loss to 1.2%, thanks to Friday’s gain.
“This may have put a floor on the gold price in the interim, and may hold off the impending bear-market slide,” wrote Lucas.
Analysts at Commerzbank noted that gold remains in a tough position owing to continuing outflows from gold exchange traded funds, as well as fresh news that speculative financial investors continued to go bearish on the metal.
They noted that those investors cut their net long positions by 11.7 thousand to 44.2 thousand contracts in the week to April 2. “This puts them only just above the four-year low they hit in early March,” said analysts at Commerzbank.
They noted that in the case of silver, there are now even net short positions, and the last time this happened for a single week was September 2007. “Although this is unlikely to happen with gold, the reduction in net long positions could well continue,” the analysts said.
Analysts at Citigroup said they remain bearish on both silver and gold, which they said are “hovering dangerously above weak support levels and the strong dollar is squeezing the life out of them.
“There may be a chance of a decent bounce off the $1,530/oz and $26.20 near term support levels for gold and silver respectively but a fall below that may see $100/oz off gold and $2.00/oz off silver very quickly,” the analysts said.
Silver for May delivery SIK3 -0.28% fell 5.5 cents, or 0.2%, to $27.17 an ounce. Silver fell 3.9% last week.
May copper HGK3 +0.69% picked up 2 cents, or 0.7%, to $3.37 a pound. Copper closed 1.6% lower last week.
July platinum futures PLN3 -0.01% rose $1.10 to $1,536.60 an ounce, and palladium for June delivery PAM3 +0.48% rose $6.85, or 1%, to $730.75 an ounce.
Platinum ended last week down about 2.5%, and palladium gave up 5.8%.
Commerzbank analysts said long speculative positions on platinum and palladium expanded further in the same reporting week. “They are now at a new record high in the case of palladium. The 5% slump in the price of palladium is thus presumably due to selling on the part of money managers,” the analysts said. MADRID (MarketWatch)
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