Speculators Throw in the Towel on Gold

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Speculators reduced long gold bets and increased short gold bets.

The above chart is from 321Gold. It matches the CTFC Report.

COT Report: Huge (20%) large spec gold futures short contracts jump. Net long position(now just 92.4K) only lower twice since late-2015 bottom. In early 2016 (when gold soared, & early July 2017(gold up $140oz +12% in 7 weeks). All other gold rallies began with higher long levels

— fred hickey (@htsfhickey) May 18, 2018

Jump in Shorts

Last Week = (101,695 + 41,554) minus the jump (13,396 + 11,449) = 118,404

Increase in shorts = (13,396 + 11,449) = 24,845

Percentage Increase = 24,645 / 118,404 = 20.98%

Long Liquidation

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Frequently one hears comments like "commercial reduced their short positions".

While arguably accurate, it conveys the wrong idea.

Commercial traders, except for producers who do sell short, simply take the opposite side of the trade. The commercial traders are not net short, they hedge.

Thus it is a more accurate summation to call this for what it is: Long liquidation. Gold longs are increasingly unconvinced and are throwing in the towel.

I believe speculators throwing in the towel is ultimately bullish for gold.