21 December 2015 at 9:27 GMT
- Bullish commmodities bets up for a third week in a row
- Buying mainly only in futures for crude oil, corn and wheat
- Bearish bets on gold reached new record ahead of Dec 16 FOMC
- Gold selling primarily driven by longs exiting, short side stayed close to steady
- Gold found support at $1,045/oz for second time after the US rate hike
- Rest of December could trigger some short covering in gold
- Crude setting new multi-year lows, met last week by short-covering
- Crude saw first week of net-buying out of six as WTI neared financial crises low
The US dollar and pace of further US rate hikes will set the tone for gold in early 2016. Photo: iStock
By Ole Hansen
Money managers increased bullish commodity bets for a third consecutive week. The buying was concentrated, however, in just three futures markets: crude oil, corn and wheat. The metal sector took another hit ahead of the December 16 FOMC, with bearish bets on gold rising to a new record.
Money managers increased record net-short gold positions even further ahead of the FOMC meeting last week. As the table above shows, the selling was primarily driven by longs bailing out, with the short side staying close to unchanged. With the net-short already at a record high as we enter 2016, the dollar and the pace of further US rate hikes will determine whether further price weakness can be achieved in the early parts of 2016.
Gold having found support at $1,045/oz for a second time in the aftermath of the US rate hike, the remaining two weeks of December could potentially trigger some short covering as trading books are lightened during the quiet period.
Crude oil continue to reach new multi-year lows, and last week this was met by short-covering from money-managers holding a record short position. The first week of net-buying out of six was seen as the price of WTI crude oil approached support at the 2008 financial crises low. Apart from year-end, which normally yields quiet and low liquidity, bearish traders are left worrying about a recovery.
Full update attached
– Edited by John Acher
Ole Hansen is head of commodity strategy at Saxo Bank