By: Mike Hammer
Gold speculators turned bullish this past week, following two weeks of bearishness on gold prices. The latest Commitment of Traders report shows large speculators had been slightly negative on gold futures with declining trade sizes.
This indicates two things: First, pricing of the trades showed that as gold dropped toward the $1300/oz psychological barrier, traders weren’t sure if gold could hold or if it might drop more. Second, volume decreasing then turning around showed uncertainty in that trade – meaning traders weren’t really convinced gold was going to drop below $1300. Usually when you see large volumes on one side of a futures trade or the other, that’s a pretty good indicator of the short-term direction of prices.
The sudden turnaround from the short side to the long side on decent volume indicates traders are more certain gold will at least hold at current prices, if not rise in the short term. While there is always uncertainty, more analysts seem to share this view.
This Gold Enthusiast sees gold as holding 1300 and rising as we head into summer, with 1365 acting as overhead resistance in the short term. You can read more about the latest COT report at today’s featured article here.