Gold net longs reduced, Oil short exposure cut - TDS

Research Team at TDS, lists down the CFTC commitment of traders report for the week ending May 31st, 2016.

Key Quotes

“Increasing confidence the US central bank will  pull the trigger on higher rates in the upcoming FOMC meetings, a firm USD, and recently elevated yields helped to convince money managers to again aggressively cut their overextended net long gold positioning. But unlike last week, the lack of accompanying slide in prices saw specs cover their short exposure as they likely believed technical support has been reached. Still, net longs dropped by a hefty 18.4k lots. However, following Friday's very disappointing US payrolls data, which prompted traders to sharply reduce the probability of a summer hike and propelled gold up toward resistance near $1,244k, we likely had significant additional short covering and long position extension.

Expectations of lower US production, lower inventories and the belief that OPEC will keep production near current levels prompted specs to aggressively cover their short exposure. However, with WTI eyeing $50 amid OPEC meeting uncertainty, money managers also cut their long exposure. On balance, however, the speculative investor segment moved net long, which suggests confidence WTI crude has upside.

Sliding prices along with demand fears, amid a somewhat negative precious metals environment, prompted specs to very aggressively reduce net long platinum exposure. Investors cut longs by some 3.5k lots and grew short positions by 1.2k lots, which resulted in a net position shortening equivalent to 5.2% of open interest.

With copper dropping to technical support and with COMEX net short exposure looking quite overdone, specs decreased net shorts by a firm 1.6% of open interest. As we pointed out last week, money managers actually aggressively covered short exposure on the belief that even modestly positive news could move copper off the lows. Indeed, this has occurred following Fridays Payrolls drive USD decline.”