COT: Record gold buying pace continued ahead of FOMC

Commodities 5 minutes to read

Ole Hansen

Head of Commodity Strategy

Summary: Hedge funds increased bullish bets across 24 major commodity futures by 44% during the week to June 18, the day before the FOMC meeting.

Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

To download your copy of the Commitment of Traders: Commodity report for the week ending June 18, click here.

Gains were led by WTI crude oil, gold, soybeans, corn, wheat and sugar. At the other end, natural gas and Brent crude oil saw most of the selling.

Crude oil was mixed, with a small combined reduction in the net-long being the result buyers returning to WTI for the first time in eight weeks while selling of Brent extended into a sixth. Since April 26 the combined long has been cut by 41% or close to 300k lots hence the bullish reaction to the post FOMC dollar weakness, the biggest drop in US oil stocks in six weeks and not least worries that tanker and drone attacks in the Mideast could escalate to something more dramatic.

Natural gas remained under attack from short-sellers as the price slid to a 1995 seasonal low on rising US stockpiles. Rising shale output has swamped a market where a sustained period of summer heat is now needed to boost demand from utilities and bring about short-covering.

Strong buying of gold continued ahead of the post-FOMC surge to $1,400/oz. Funds increased the net-long by 21% to 190k lots, a 16-month high. During the past three weeks a record 157k lots has been bought and with this in mind the short-term focus turns to gold’s ability to hold onto these gains and reassure new longs that they have not bought another high but instead a potential new low. With that in mind the 2016 high at $1,375/oz and 2018 high at $1,366/oz are now the key technical levels that need to hold in order to avoid profit taking.

Copper’s bounce from key support at $2.6/lb supported a 15% reduction of the record short while renewed widening of platinum’s record discount to gold, approaching 600 dollars, helped drive a 36% increase in the net-short to 21k lots a 40-week low.

Strong buying of grains extended into a fifth week led by soybeans (net-short cut to 12-week low) and corn (net-long at 1-year high) as ongoing weather worries could further reduce the 2019 crop outlook. Primarily due to the continued short position in soybeans the combined long of the three major crops only reached 90k lots, less than one-quarter of the most recent seasonal peak from 2015.

Soft commodities were mixed with short-covering halving the sugar net-short to a 7-week low. The cocoa net-long reached a one-year high before profit taking emerged to challenge the uptrend.

What is the Commitments of Traders report?

The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday. The report breaks down the open interest across major futures markets from bonds, stock index, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.

In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.

In financials the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and other.

Our focus is primarily on the behaviour of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.

They are likely to have tight stops and no underlying exposure that is being hedged. This makes them most reactive to changes in fundamental or technical price developments. It provides views about major trends but also helps to decipher when a reversal is looming.

Quarterly Outlook Q1 2023: The models are broken

The models are broken
The market is trying to get back to the pre-Covid and pre-war times, but that model is broken. A new dawn is here and the financial world needs to adapt.

Steen Jakobsen,
Chief Investment Officer
Read article
Refitting China’s broken growth engine
A political switch in China towards less tough control of its people and companies may kick things back into gear.

Redmond Wong,
Market Strategist
Read article
Broken Europe
While the economic situation in Europe may not be as bad as feared, there's still a plethora of things to fix.

Chris Dembik,
Head of Macroeconomic Research
Read article
A painful phase transition
As the world turns increasingly bipolar, equity markets face harsh times as they transition into the new reality.

Peter Garnry,
Head of Equity Strategy
Read article
Opportunities in a deglobalising world
New alliances and collaborations outside of China may lead to prosperous times in Asia.

Charu Chanana,
Market Strategist
Read article
Is the ‘balanced’ 60/40 equity/bond portfolio a thing of the past?
For years, it was thought that the balanced portfolio was a thing of the past. But recent developments may have changed that.

Peter Siks,
Investment Coach
Read article
China reopening will drive another strong year for commodities
Following a dramatic and volatile 2022 with good returns, a lot of this year's commodity performance may be driven by Chinese politics.

Ole S. Hansen,
Head of Commodity Strategy
Read article
Latecomers to tightening party, EUR and JPY, may prove safest harbours in the first half
2023 could be a tough year for currencies but EUR and JPY may have some upside.

John J. Hardy,
Head of FX Strategy
Read article
China reopening a boon to Australian assets?
The commodity-heavy Australian market may have a good start to 2023, as the Chinese focus on growth signals demand for Aussie resources.

Jessica Amir,
Market Strategist
Read article
Can institutions save crypto before retail vanishes?
From a near-perfect environment for speculative assets before 2022 to the opposite, crypto faces fundamental challenges.

Mads Eberhardt,
Cryptocurrency Analyst
Read article

You can access both of our platforms from a single Saxo account.

Preview platform Open Account

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Manage Consent

Details Cookies

Important margin product information

Cookie policy

Necessary

COT: Record gold buying pace continued ahead of FOMC

Ole Hansen

Share

Latest Market Insights

Quarterly Outlook Q1 2023: The models are broken

The models are broken

Refitting China’s broken growth engine

Broken Europe

A painful phase transition

Opportunities in a deglobalising world

Is the ‘balanced’ 60/40 equity/bond portfolio a thing of the past?

China reopening will drive another strong year for commodities

Latecomers to tightening party, EUR and JPY, may prove safest harbours in the first half

China reopening a boon to Australian assets?

Can institutions save crypto before retail vanishes?

Your browser cannot display this website correctly.