Gold held steady on Monday, close to a one-week high touched in the previous session, as the dollar dipped on receding expectations of an imminent U.S. interest rate rise but the yellow metal's gains were capped by stronger global stocks.
JPMorgan analysts expect prices to average $1,425 an ounce in the first half of next year. "Our bullish base case remains anchored to the fact that economic growth largely remains uninspiring while rates still remain very low or negative (especially on a real basis), something a 25 basis point rate hike in the U.S. in September or December will not wholly reverse," JPMorgan said in a note.
Shifting interest rate expectations caused hedge funds to dump their bullish bets in gold and silver to a more than two-month low, according to the latest trade data from the Commodity Futures Trading Commission.
The disaggregated Commitments of Trader report (COT), for the week ending August 30, showed money managers decreased their speculative gross long positions in Comex gold futures by 17,870 contracts to 266,680. At the same time, short bets increased by 4,220 contracts to 35,086. The latest data shows the gold’s net length now stands at 248,810 contracts.
Net long or short positioning in the CFTC report reflects the difference between the total number of bullish and bearish contracts. Traders monitor the data to gauge the general mood of speculators, although excessively high or low numbers are viewed by many as signs of overbought or oversold markets that may be ripe for price corrections.
Ole Hansen, head of commodity strategy at Saxo Bank noted that gold’s net length dropped by 10% from the previous week as prices fell towards key psychological support at $1,300 an ounce.
Analysts and traders are also waiting to see whether physical demand picks up in India over the coming weeks because of festivals and the wedding season.
Reference: KITCO, Reuters
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