from UBS:
After two consecutive weeks of liquidation in gold gross longs amounting to 2.80moz, positions were re-established between August 5 and 12 according to the latest data from the CFTC. Gold positioning increased by a net 3.47moz, 70% of which was due to fresh longs. This coincided with an increase in gold prices of as much as 3%, before some consolidation and prices eventually easing off the highs. Gold gross shorts covered 12% or 1.00moz of positions, further adding to net length. At 17.89moz, gold net longs are at the highest level in three weeks and sit at 54% of the all-time high. Ahead this week, market participants will likely be focusing on the FOMC meeting minutes due to be released on Wednesday and the Fed’s Jackson Hole symposium to be held on August 21-23. Much of the attention will be on Fed Chair Yellen’s keynote speech on Friday.
Gold’s choppy move on Friday reflects persistently poor liquidity conditions and the reality that the market is currently dominated by short-term players. This is well-illustrated by the relationship between changes in spec positioning and gold price action. Conviction levels are low amid a lack of clarity on gold’s path over the weeks and months ahead. Much of the current macro environment looks already baked into the gold price – we believe a fresh catalyst is needed to revive overall investor interest, and the upcoming Fed event risks could be a potential source.
Gold spot is currently trading at $1302.
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