COT: Gold buying jumped ahead of CPI shocker

This summary highlights futures positions and changes made by hedge funds across commodities, forex and financials up until last Tuesday,  November 9. The release of the report by the US CFTC was delayed until Monday due to a Federal holiday last Thursday. The week covered the run up to but not including last Wednesday's CPI shocker which helped send real yields lower and both gold and the dollar sharply higher. Already ahead of the data we had seen a near 0.25% tumble in US ten-year real yields as the market drove up inflation expectations.
 
Elsewhere it was a week where the general level of risk appetite supported higher stocks while the dollar drifted lower. In commodities the overall exposure across 24 major commodity futures held steady with net selling of energy, grains and softs being offset by demand for precious metals, not least gold, and livestock. 

Forex

Speculators, wrongly as it turned out, sold dollars for a fifth week ahead of last week's CPI release. The net long against ten IMM currency futures and the Dollar index was reduced by 4% to $21.9 billion, a six-week low.

Heavy selling of GBP being offset by EUR, AUD, CHF and JPY buying. 

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

• 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