Money manager net longs fell sharply last week as gold volatility increased

Goldhub blog

Money manager net longs fell sharply last week as gold volatility increased

Adam Perlaky
Manager of Investment Research
World Gold Council

Posted:

Gold performance/technicals:

  • Gold moved higher last week (XAU 0.5%, LBMA 0.6%) as the US dollar gave back some of the previous week gains and market weakness drove rates lower.
  • Gold moved back above the $1,500 and 50-day moving average levels, suggesting the bearish head-and-shoulders breakdown the previous week was a false move. These levels will remain very important as to sense the next price direction of gold.

 

Gold Price

 

Liquidity:

  • COMEX net longs fell sharply last week from 1,113t to 938t. Notably the money manager net longs fell nearly 20% from 908 to 731, a sign of a pullback in what was very optimistic positioning by money managers. This could be a function of profit taking or concerns with the most recent price sell-off.
  • Trading volumes held the September average at around $183bn a day, 60% higher than 2018 averages.

 

COMEX Net Longs

Source: CFTC, Bloomberg

 

Gold-backed ETF flows by time periods:

  • $800mn worth of inflows globally last week split between the US (+$380mn) and Europe (+$408mn). Other regions had minimal flows.
  • Flows are higher by $638mn in October; September ETF flows will be released tomorrow at 8am EST

 

Options and volatility:

  • Implied volatility rose to near 1-yr highs with the recent >1% moves in the price of gold. Options skew remains bullish in sentiment with premiums paid for calls versus puts.
  • $1,500 and $1,550 house significant futures open interest and should act as a trading range in the near term.