Gold price shows strength in a turbulent week

In the past week there were also some significant (monetary) political events to process for the gold price. In the end, more forward transactions were concluded on the US futures market as prices rose. It is a sign of market strength.


Gold price stable

The gold price followed a strong zigzag course last week, but ended with gains. The past trading days were marked by the results of the central bank meetings (Fed, ECB) and new developments in the trade conflict between the USA and China. Yesterday, both sides announced an agreement on a tentative agreement. However, nothing has been signed yet. In the UK, the Torries’ clear election victory removed some of the uncertainty surrounding Brexit.


CoT data

On the US futures market there was lively movement in the positions of the largest groups of traders in the area of ​​gold futures. This is shown by the latest CoT data as of December 10, 2019. The net short position of the “Commercials” decreased by 6 percent compared to the previous week to 302,283 contracts. Within the subgroups “Swap Dealers” (including major banks) and “Prod / Merch / Proc / User”, net sales decreased by approximately the same amount. On the other hand, the net long position of the “Commercials” decreased by almost 7 percent to 270,920 contracts. “Managed money” (hedge funds, investment companies) was primarily responsible for this decline. Their forward purchases decreased by 11 percent net.


Open interest

Open interest, the sum of all open gold contracts on COMEX, fell 1.57 percent to 690,003 contracts compared to the previous week. By the close of trading on Friday, the share price rose sharply by 3.2 percent to 712,222 contracts.


Short-term market strength

Gold prices climbed 1 percent last week to $ 1,475.90 an ounce (FOREX). Classification: Rising open interest with rising gold prices is a sign of market strength. Because new futures contracts are concluded with rising prices. This may also be a signal that the players in the financial markets do not trust the apparent relaxation in the various economic and political settings.