Boris Mikanikrezai, precious and base metals strategist for FastMarkets, in his Gold Weekly report Tuesday. He highlighted the latest CFTC Commitment of Traders report (COTR), which showed that money managers cut their net long positioning for a third straight week over the reporting period (June 20-27).
However, even if speculative sentiment seems to be turning negative, which could lead to lower prices, Mikanikrezai noted there are two developments that are encouraging.
“First, gold remained broadly resilient in spite of the magnitude of the wave of speculative selling over the reporting period, which suggests perhaps the presence of physical buyers ready to support prices,” he wrote.
“Second, the net spec length in gold now represents just 27% of its record, suggesting that there is limited room for additional speculative selling.”
“The fact that they were net buyers in June suggests that investor sentiment remains strong, with ETF investors inclined to accumulate on a steady basis,” he said.
“Going forward, I suspect ETF investors will continue to accumulate gold at a slow pace in order to have diversified portfolios, but the pace of inflows may become stronger in case of a sudden wave of risk aversion, forcing some too-complacent investors to boost their exposure to safe-haven assets like gold.”
“I need to see a firm daily close below the May low of $1,214 per oz before closing out my bullish bet and reassess the situation.”
Reference: Kitco
Read more: http://www.kitco.com/
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