Gold Price Hits 6th London High in a Row as Comex Futures and Options Trading Jumps
Monday, 3/11/2024 15:16
GOLD PRICES edged higher near fresh records on Monday after speculators trading Comex futures and options doubled their bullish position but investors continued to liquidate gold-backed ETFs ahead of this week's US inflation data,
writes Atsuko Whitehouse at BullionVault.
Spot gold prices in the US Dollar steadied around $2180 per Troy ounce, $15 below Friday's new record top but heading to
record a new all-time gold high for the 6th day running at London's 3pm gold benchmark.
Last week's move – the biggest gain since the US banking sector's "mini-crisis" last March – added almost 6% to Dollar gold prices, taking bullion 5.3% higher in 2024 to date.
Friday's new highs came as trading volume in Comex gold futures and options jumped 58.6% from the day before to reach the heaviest turnover since mid-March 2023, when the collapse of Silicon Valley Bank and Signature Bank
signalled a 'mini crisis' in US regional banking.
Latest data now show that last week's move began as hedge funds and other leveraged speculators in Comex gold futures and options expanded their net long position by 92.6% with the steepest weekly growth in bullish betting in almost 5 years.
But reaching the notional equivalent of 408 tonnes, the Managed Money category's net spec long – as tracked by data gathered and published by US regulators the CFTC – was only the highest since 2 January, when gold prices were 5.4% lower than today, and it came only a little ahead of its 12-month or 5-year average.
Totalling 40.3% more than the 1-year average, last week's Managed Money net long was also just 14.3% higher than the 5-year average and less than half of the recent peak position in September 2019.
Gold prices were then 30% below the current highs, trading at $1520 amid concerns over US-China trade relations and the UK's Brexit negotiations.
"Comex speculative buying was behind the rally through Tuesday, and last week's further price gains would certainly mean more buying from Tuesday through Friday," says Bruce Ikemizu, chief director of Japan Bullion Market Association said in his latest note.
In contrast to Comex speculation, gold-backed ETF trust funds continued to shrink last week as both the SPDR Gold Trust (NYSEArca: GLD) and the iShares gold ETF (NYSEArca: IAU) saw net investor outflows, returning in size to pre-pandemic levels with their 10th and 6th consecutive weekly liquidations respectively.
"If European and US investors, who make up the majority of gold ETFs, turn from selling gold to buying gold, it is probably best to assume that the gold rally is far from over," Ikemizu continued.
"Gold needs to correct," warns Rhona O'Connell at brokerage Stone X Group Inc, "[especially] given that a good part of the run has been driven latterly by the [breaching] of stops, momentum trading and a band-wagon effect.
"When momentum fades, expected a correction."
Speculators also raised their net bullish betting on silver to a 9-week high on the latest CFTC data, flipping from a net short position overall.
Today the
price of silver steadied just below 2024's highs at $24.30 per Troy ounce, having risen 7.8% last week and nearly 3% for this year so far.
Western stocks market meanwhile slipped for the 2nd session running but Chinese equities closed higher on as gold prices in the precious metal's No.1 consumer market hit a fresh all-time high for the 6th consecutive sessions at ¥507 per gram.
Gold priced in both the UK Pound and Euro paused its rally and steadied near Friday's new records above £1700 and €2000.
Bitcoin meanwhile topped $71,000 for the first time, advancing for a 6th straight day and taking this year's rally to almost 70%.
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