At the beginning of July, US banks‘ selling positions in US gold futures trading fell by more than a quarter. Institutions‘ interest in a lower gold price should also decline accordingly.
The latest Bank Participation Report of the US Securities and Exchange Commission (CFTC) shows the banks‘ explicit positions in US trading in gold futures as of 3 July 2018.
According to the data, the net short position of US banks fell massively at the beginning of July. The net sales of these (five) banks fell by 28 percent to 59,878 contracts (green chart). Net positions declined by 26.5 percent.
At that time, US banks held the lowest net monthly short position on gold since March 2017.
And the net short position of all banks combined (US banks and non-US banks) also fell by 26.5 percent to 97,657 contracts compared to the previous month. The share of open interest accounted for by short positions of all banks fell from 39 per cent to 29.7 per cent (red chart).
Open interest, i.e. the total of all open gold contracts on COMEX, rose by almost 10 percent to 494,164 contracts during the same period. The price of gold fell by 3.4 percent to USD 1,252.75 per ounce.
Realization: With the reduction of short positions, banks‘ interest in a further fall in the gold price is also declining. However, this is no guarantee that there will be no further turbulence in the gold market.