Weekly COT report: Managed funds most bullish on gold in 3-months
- Traders trimmed net-long exposure to the US dollar for a fifth consecutive week. According to data from IMM, traders are now net-long the dollar by $6.2 billion (down -$1.4 billion on the week).
- Large speculators pushed net-long exposure to euro futures to their most bullish level since in 6-months
- Traders flipped to net-log exposure on GBP futures
- Excluding GBP, all weekly changes among FX majors were below 10k contracts
US dollar:
Bullish exposure to the US dollar continues to dwindle, which is at odds with the fact that the Fed are about to embark on multiple hikes. Yet it’s also possible that, with so many hikes now expected, investors are concerned that the Fed may tip the US into recession. According to data from IMM, net-long exposure to the dollar has fallen to its lowest level since April and has fallen for five consecutive weeks. Meanwhile, traders are their most bullish on emerging markets against the dollar in around 2 years.
GBP futures:
Traders flipped to net-long exposure on the British pound for the first time since November. Bears trimmed -5.3k contract yet added 5.4k long contracts which tipped traders to net-long exposure of 2.2k contracts. So traders have now placed their bets but we now need prices to back up this bias and break higher.
AUD futures:
Traders remain overwhelmingly net-short the Australian dollar. In fact net-short exposure is close to a record level of bearishness whilst bulls are side lined. But a problem many bears are facing is that AUD prices remain well supported above 70c. This means that if prices do not move lower as anticipated, bears may be forced to close out and inadvertently end up supporting a short-covering rally they didn’t see coming.
As of Tuesday 15th February 2022
- Managed funds on gold futures rose to a 3-month high
- Net-long exposure to copper rose to a 16-week high
Gold futures:
Gold grabbed plenty of headlines last week amidst the tensions between Russia and Ukraine, helping it rally for a third consecutive week and challenge $1900. Managed funds piled into the yellow metal and were their most bullish on it in three-months but, looking at how prices rallied into the weekend, we strongly suspect net-long exposure if actually much higher than the delayed COT data suggests. The biggest threat to gold prices right now is a Russian retreat. And as that doesn’t look very likely then we expect dips to be bought and for an eventual break above 1900.
Copper futures:
Positioning on copper futures has piqued our interest as net-long exposure has risen to its highest level in 16-weels, and at its fastest over the same period. Furthermore, it was seen with rising gross longs and reduction of shorts so we might just have the early indications of a bullish rally developing. But what we now need to see is prices rising sustainably above $4.50 and for them to challenge the $4.70 highs, or we may be at risk of another leg lower as these pre-emptive bulls are forced to liquidate.
How to trade with City Index
You can easily trade with City Index by using these four easy steps:
-
Open an account, or log in if you’re already a customer
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
- Search for the company you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
City Index is a trading name of StoneX Financial Pty Ltd.
The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.
While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.
StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.
It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.
StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.
© City Index 2024