One Mans Bullish Take On Gold & Silver Using Cot Analysis

Negative momentum seems to be continuing for gold today, as the price of the yellow metal is sliding 1.9% at $1,679 per ounce following a spike in US Treasury yields. People are pointing to the Dodd-Frank Financial Reform Bill as a possible explanation. Others are suggesting a change in mentality – that the sellers are starting to think the price will not go much lower. Sign in or Register an account to save these items permanently.

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  • Even in the contrarian circles in which I traffic, few wanted to touch it.
  • Please ensure you fully understand the risks and seek independent advice.
  • There is trend-line resistance from 2013 which just last week put a lid on the advance.
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  • Sometimes I wonder if this aspect of the gold CoT is a bigger bogeyman than central-bank gold sales.
  • That won’t happen until gold’s global supply-and-demand fundamentals turn bearish, virtually impossible for many years yet.

While there were times when gold did indeed carve a short-term interim high when commercial net shorts reached a bull record, there were just as many times when gold powered on higher despite such a record. Given this statistic’s bipolar behavior relative to the gold price over this bull, it is simply not a high-probability harbinger of any move. Out of the 8 records noted above, only 4 coincided with major interim gold highs. With just 50/50 odds for success, it amazes me that anyone still cares about this CoT metric.

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So next time an analyst makes a statement like “gold open interest soared 10,000 contracts”, keep a few things in mind. The actual number of contracts is irrelevant since OI is growing on balance. Convert the raw number into a percentage, which is meaningful.

gold cot report

Sometimes I wonder if this aspect of the gold CoT is a bigger bogeyman than central-bank gold sales. I remember well CoT analysts at that time claiming gold had to correct hard because OI looked frothy. Yet from those $675 levels, gold soon soared to $1000 in early 2008 .

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Analyzing this beast is certainly not easy, which is probably why very few traders undertake this themselves. They generally wait for professional analysts to decipher and interpret it. Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Both CBOT soybean and corn rose ahead of the WASDE report, which is scheduled to be released on Tuesday.

gold cot report

We do not advise or recommend any provider but are here to allow our reader to make informed decisions and proceed at their own responsibility. Contracts for Difference (“CFDs”) are leveraged products and carry a significant risk of loss to your capital. Please ensure you fully understand the risks and seek independent advice. By continuing to use this website you agree to our privacy policy. The agriculture sector was also in demand ahead of the signing of the trade deal with 11 out of 13 commodities tracked in this being bought. The net-long across the sector jumped by 88k lots to 327k lots, an 18 month high.

Understanding The Cot Report

This typically starts a period of cliff-dive type down days, as the hedge funds all seem to rush for the exits at once and the Wall Street dealers use that selling to cover their short position. Change in Open Interest for all reportable traders from legacy commitment of traders report. Percent of Open Interest for all reportable traders from legacy commitment of traders report.

Goldwatch: The Commitment Of Traders Cot Report

Rising yields will make it more challenging for the yellow metal to trend higher, however much will depend on inflation expectations and what this means for real yields. Meanwhile, last Friday Joe Biden called for fiscal spending and said, ‘it will be in the trillions of dollars’. Hopes for spending in clean energy and infrastructure will likely increase investor appetite for metals. Meanwhile, investors this week will also pay attention to money supply and credit data from China. Obviously a record commercial net-short position didn’t presage a sharp tumble in the gold price. And this ties in with why CoT analysis is often so misleading.

Trading The Cot Report

With gold forging glorious new record highs , traders’ interest in this metal’s 8-year-old secular bull is ballooning rapidly. And like most commodities, the lion’s share of gold trading happens in the futures markets. So the tactical gold-price action at any given moment is usually dominated by futures buying and selling. When the large spec gross long position runs up to a relatively high level, it’s usually a signal that the market is getting ready to correct. As such, we will observe an inordinately high level in the Commercial category short position.

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A futures contract simply sets a price today for a transaction in the future. Knowing this, traders often scour futures reports to look for insights into gold’s current price trend. Is it likely to be sustainable long enough to profitably trade, or is a reversal imminent? While there is endless futures data available for analysis, the granddaddy of all futures reports is certainly the Commodity Futures Trading Commission’s Commitments of Traders Report.

How To Use The Commitment Of Traders Cot Report Strategy In Forex Trading

This is a core tenet of the financial markets in general. Nothing begets more interest in an asset like relentlessly rising prices. This dynamic forms the virtuous circle that drives all secular bulls higher. Gold prices traded below $1,180 last week but received strong demand as bargain hunters and short covering buoyed the price. Once in the afternoon hours of Hong Kong trading and the other just before the New York open.

One Mans Bullish Take On Gold & Silver Using Cot Analysis

Learn how to exploit the CFTC’s Commitments of Traders to improve your trading. Large market move are telegraphed by imbalances between commercial and speculative players. Find out how to read these measures to spot capitulation moves before they occur. Another problem with reading too much into the perpetual interplay between these three groups is the lines between them are blurred and arbitrary.