Commodity CFTC: Gold longs surge the most in months

Hedge funds and large investors last week raised their long exposure to the 24 commodities that we track by 13 percent to 1,140,000 contracts of futures and options. In nominal terms this was an increase of USD 12 billion to 100.5 billion on the previous week and the highest level seen for three months. Investments in commodities are expanding at the quickest pace in six years after prices have staged a very strong comeback from the lows back in Q4 2011 helped by the increased prospect for growth and projected supply deficits among several commodities. All sectors apart from softs saw an increase in the amount of long positions with especially metals and grains receiveing some attention.




Energy: Most of the action was seen in natural gas where investors switched back to net long positions for the first time in six month as so far unfounded hopes have been raised that a sub 2.5 dollar price will trigger additional production cuts. WTI crude investors reduced exposure a little as some switched their long exposure to Brent crude which has been holding up much better recently.

Metals: Speculators threw caution to the wind and increased their long exposure to gold by 21 percent as fear of losing out on a 2011 style rally gathered momentum. This was the biggest weekly increase since July 2011 and was helped by the recent Federal Reserve projections about a prolonged period of low interest rates. Silver longs were increased by 14 percent while copper investors booked some profit after the strong rally during January.

Grains and soybeans: Plunging temperatures in Europe and adverse weather elsewhere triggered a strong wheat rally over the past couple of weeks. This was reflected in the data as investors reduced their short position in CBOT wheat by one third while Kansas Wheat (better quality) saw long positions increase by 40 percent.

Softs: the sector saw an overall 5 percent reduction primarily caused by cotton and coffee which saw long positions reduced as prices fell.

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