Are gold bulls shooting for $1,500 before year’s end?
Last week February 2011 gold opened the week at $1,365 and closed the week at $1,406.20. The past week, the U.S. dollar did see some weakness, but with Germany announcing no more money to help Europe’s debt issues, we once again could see a dollar rise. Also, uncertainty in Europe will do well for the gold bulls, as institutions push people into what they view as safe havens. Gold is definitely the leader here. Look at the charts below to see where the technicals are lining up with the COT report.
Proceed to Page 2 for the latest COT data...
COT data
We still see producers and swap dealers in extreme net short positions in this market. Combined, their net shorts went from 263,893 contracts to 270,469 contracts. Again, these are contracts net short.
Commercial Net Tracker instructions:
This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A. If the current value is at a 12-month low, the cell will display a red/burgundy background. B. If the current value is at a 12-month high, the cell will display a green background. C. If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D. If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
| Commodity |
12-mo low |
12-mo hi |
3-Dec |
26-Nov |
| Cattle (feed) |
-2,917 |
7,100 |
2,647 |
3,933 |
| Cattle (live) |
-73,179 |
344 |
-46,454 |
-47,560 |
| Hogs |
-38,039 |
836 |
-5,574 |
-2,517 |
| Corn |
-373,558 |
119,389 |
-335,732 |
-315,890 |
| Oats |
-5,208 |
829 |
-3,591 |
-3,781 |
| Soybeans |
-179,666 |
56,797 |
-172,362 |
-166,778 |
| Soybean meal |
-90,487 |
-6,350 |
-64,889 |
-58,659 |
| Soybean oil |
-111,786 |
32,394 |
-69,326 |
-68,825 |
| Wheat |
-16,413 |
82,654 |
43,438 |
31,005 |
| Orange juice |
-22,027 |
-6,588 |
-13,666 |
-14,834 |
| Coffee |
-47,729 |
-4,637 |
-35,214 |
-37,049 |
| Cocoa |
-49,897 |
8,586 |
-1,662 |
-1,403 |
| Sugar |
-241,259 |
-104,983 |
-173,856 |
-173,658 |
| Cotton |
-69,857 |
-12,970 |
-48,338 |
-46,678 |
| British pound |
-31,274 |
97,211 |
6,929 |
-12,711 |
| Canada dollar |
-105,107 |
-13,109 |
-41,661 |
-42,686 |
| Euro FX |
-62,835 |
124,494 |
1,998 |
-956 |
| Japanese yen |
-52,533 |
92,866 |
-24,065 |
-23,259 |
| Swiss franc |
-33,169 |
27,482 |
-13,396 |
-13,401 |
| US dollar index |
-46,250 |
2,587 |
-12,874 |
-14,140 |
| Mexican Peso |
-118,008 |
-14,488 |
-83,084 |
-91,873 |
| Australian dollar |
-102,706 |
-10,793 |
-41,514 |
-43,376 |
| S&P 500 |
-83,827 |
33,981 |
-75,459 |
-74,826 |
| T-note -10 yr |
-74,761 |
356,573 |
84,175 |
14,837 |
| T-bond -30 yr |
-43,324 |
158,206 |
16,188 |
22,188 |
| Eurodollar |
-1,179,414 |
105,872 |
-75,002 |
-392,938 |
| Crude oil |
-198,943 |
-23,057 |
-172,595 |
-165,622 |
| Heating oil |
-69,179 |
7,568 |
-43,681 |
-38,615 |
| Unleaded gas |
-91,597 |
-10,453 |
-80,757 |
-75,183 |
| Natural gas |
110,310 |
179,433 |
131,956 |
127,606 |
| Copper |
-34,883 |
1,793 |
-23,909 |
-25,426 |
| Gold |
-303,791 |
-207,691 |
-270,469 |
-263,893 |
| Platinum |
-32,628 |
-15,759 |
-25,454 |
-25,297 |
| Silver |
-65,413 |
-37,800 |
-49,770 |
-46,853 |
Proceed to Page 3 for this week's detailed fundementals charts...
Fundamentals
Gold prices are trading on a firm note, modestly below their recent all-time high of $1424.30 an ounce (nearest-futures Dec contract).
Bullish factors include:
- Heightened concern over contagion of the European sovereign-debt crisis after credit-default swaps insuring Italian, Portuguese and Spanish government bonds all rose to record highs.
- Continued demand for gold as confidence in the Fed remains low and concerns remain high for an eventual inflation outbreak.
Bearish factors include:
- The rebound in the dollar index to a 2-1/2 month high.
- Slack inflation pressures which cut demand for gold as an inflation hedge saw a record low of +0.6% y/y for the October core CPI.
- Vulnerability to long liquidation pressure with hedge funds holding a record amount of gold.
Fundamental Outlook - Bull market correction - Gold prices firmed on European debt concerns despite a stronger dollar. Gold may see some weakness if the dollar strengthens further, but the long-term picture remains bearish for the dollar and bullish for gold as the Fed potentially is stuck with its QE2 program at least through June 2011.
