21 August 2017 at 8:08 GMT
- Funds boosted exposure to precious and industrial metals in week to Aug 15
- Geopolitical tensions and dovish central banks drove gold towards $1,300/oz
- HG copper in demand, though struggled to clear $3/lb hurdle
- Farm commodities sold across the baord
- WTI selling persisted, but energy sector lifted by increase in natural gas longs
Chicago Board of Trade trading floor. Photo: Shutterstock
By Ole Hansen
Hedge funds further increased their exposure to metals, both precious and industrial, in the week to August 15. Agricultural commodities saw heavy selling across the board, while the energy sector got a lift from a jump in natural gas longs despite another week of WTI crude oil selling.
The net long in gold jumped by 41,000 lots to 180,000 lots, the highest since last October. North Korea worries, political friction in the US and dovish signals from the US Federal Reserve and the European Central Bank raised the prospect of a renewed attempt to break resistance at $1,300/oz.
The continued surge among industrial metals on the Shanghai futures exchange also helped attract continued buying of high-grade copper despite it struggling to break above $3/lb. Speculative bets nevertheless reached a new record of 120,000 lots.
Long liquidation in WTI crude oil persisted for a second week in response to weaker price action. But, once again, the reduction was quite small, with support coming from Brent crude where the speculative long has been rising amid improved fundamentals for this the global benchmark.
COT data covering Brent crude and gas oil will be released by the ICE Europe Exchange today at around 1300 CET
Grain and soybean traders have scrambled to reduce longs and re-establish short positions after a dramatic deterioration in the price outlook since early July. All three major crops were sold, including CBOT wheat where the December contract hit a new contract low.
The net short in sugar hit a fresh record as a surge in production – in response to high prices in 2016 – led the International Sugar Organization to reverse a shortage this season to a surplus in the 2017-18 season.
Ole Hansen is head of commodity strategy at Saxo Bank