Fedpivot Hedgefunds goldsilver Hedge funds cautious on gold and silver as Fed pivot could prove to be premature
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Markets are split roughly 50/50 that the Federal Reserve will raise the Fed Funds rate by 50 or 75 basis points next month. Analysts note that shifting interest rate expectations is driving bond yields higher. At the same time, they are also driving the U.S. dollar higher, with the dollar index holding solid support well above 104 points.
The CFTC disaggregated Commitments of Traders report for the week ending Aug. 16 showed money managers decreased their speculative gross long positions in Comex gold futures by 3,248 contracts to 100,013. At the same time, short positions rose by 1,113 contracts to 60,392. Commodity analysts at TD Securities remain bearish on gold, warning that the precious metal has yet to see a capitulation move. The Canadian bank said this week's central bank symposium at Jackson Hole could be the catalyst that ignites a new wave of selling.
Silver's positioning remains net short by 6,091 contracts, roughly unchanged from last week. During the survey period, silver prices struggled to hold support at around $20 an ounce. "Silver markets appear particularly vulnerable to additional downside, given their little exposure to the rise in supply risk premia that has supported industrial metals. We also expect its precious-metal allure to fade into the Jackson Hole symposium, where we expect Chair Powell may pushback against market expectations that rate cuts may immediately follow the hiking cycle," the analysts said.
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