Remain constructive on gold over the long term

Gold — COMEX

1. • Open interest continues to see-saw, rising by 21.5 tonnes after the previous week’s 13.9 tonne fall. Gold open interest on COMEX now stands at 1,422.1 tonnes, still only marginally up from this year’s low of 1,400.6 tonnes. Prices also gained last week, at 6.2% w/w. This is the strongest w/w rise this year.
2. • Along with prices, net speculative length increased, although only moderately, with only 26.9 tonnes added over the past week. The change in the net position was due to speculative longs being added (33.4 tonnes), with the marginal increase in speculative shorts (6.5 tonnes) detracting from the overall improvement.
3. • Given that this week’s improvement merely erases the deterioration of the previous week, the speculative market still appears to be cautious about gold’s short-term prospects.
4. • ETF holdings continued to climb, although still only modestly, at 11.3 tonnes. While this increase is encouraging, market participants still appear uncertain about gold’s direction over the next few weeks.
5. • As a percentage of open interest, net speculative length is currently around 20.8%. This is a well below last year’s average of 31.8% — a signal of a market far from overstretched.
6. • We remain constructive on gold over the long term.