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CFTC: Oil shorts added, gold longs increased - TDS

According to the CFTC weekly report (W/E Dec. 11), gold prices continued to catch a bid as money managers added to their net length after Fed Kaplan flagged risks from slowing global growth, along with the fading tailwinds of US fiscal stimulus and headwinds from trade uncertainty.

Key Quotes

“These factors all contributed to helping gold break $1,240/oz resistance, which prompted many to aggressively cover their shorts. That being said, while equities have increasingly reflected fears that stocks will no longer remain a one-way bet, speculators have continued to prefer liquidating their gold longs rather than increasing their positions for the time being.”

“The announcement of a trade-truce between the US and China at the G20 meeting, the release of Huawei's CFO, and Chinese steps towards removing retaliatory tariffs and purchasing more US soybeans were not enough to convince speculators to grow their convictions in copper. Instead, specs mostly opted to sit on their hands and keep their powder dry, but some liquidated their longs with prices near $6,200/t. We reiterate that we see a soft floor in copper, and we estimate that prices at current levels suggest that CTAs are set to significantly add to their shorts in the coming days. This could particularly weigh on prices next week as discretionary traders remain on the sidelines, while liquidity typically remains light in the final weeks of December.”

“Even as OPEC+ agreed to cut some 1.2m bpd from global crude supply and as armed groups have taken control of Libya's largest oil field, which could significantly contribute towards tightening the market, speculators added more shorts than longs and decreased their net length in WTI crude oil. The market has grown increasingly worried about global growth — a factor that is removing urgency for the bulls to pull the trigger on adding to their length. We think the market will now need to see a trend of drawing inventories before convictions towards higher prices grow.”

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