COT Flash July 10

Bottom line:  COT report shows largest one-week reduction in large commercial net short positioning for gold since August 12, 2008 (23 months).  Fifth largest gold LCNS reduction in our records since 2003.  Gold -3.9% and the gold LCNS -14.1%.  Silver -3.6% and the silver LCNS  -10.5%.  More bullish than bearish. Details just below. 

ATLANTA (COT Flash) – We came fairly close to reentering the gold trade with our short-term ammo this past week.  We actually had several limit orders cued up not all that far from the trading on Wednesday.  The idea at the time was simple.  We were looking for the “second wave down” which so often occurs in aggressive gold market sell downs.  Our initial “feeler” orders would have kicked in had gold been driven down another $25 or so.   That was with gold probing the $1,180s. 

Unfortunately (or fortunately for those already long), we counted a bit too much on past gold sell-down history this time only to see slightly more buying interest than selling with gold in the $1,180s. Gold hasn’t continued lower, yet, but it also hasn’t snapped back up to where it started in the $1,250s either.  

We did look briefly at some long option ideas also, but the premiums seemed extra rich at the time, so we stuck to the original game plan of waiting for gold to come into our expected support zone, preferring to wait to see what the commitments of traders report would show us before refining our expected support targets.  We will get to that in just a moment.   

The net result is that we remain on the sidelines with our short-term gold-silver ammunition, but, as always, we remain thankful we hold physical metal in our longer-term arsenal. 

With no further introduction, let’s get right into this week’s report. 

To read the complete Got Gold Report - COT Flash July 10 by Gene Arensberg -- click here