Hedge funds don’t want to place big bull bets on the yellow metal. That’s why it comes to mind, “Is there a short squeeze for gold prices? comes the question.
“Money managers are reluctant to make substantial bull bets”
However, some analysts note that the latest data from the Commodity Futures Trading Commission (CFTC) shows money managers are reluctant to place any significant bull bets. Commodity analysts at TD Securities comment:
There is a narrative suggesting that inflation will soon be under control, peaking early and at relatively low levels. Despite this, money managers took very few long positions according to the specifications. With gold breaking the $1,800 mark on Friday, specifications are likely to continue to cover short risks.
However, cryptocoin.comAs you follow, Fed officials are sending strong messages that a return to a more dovish policy stance is unlikely unless there is strong evidence that inflation pressures are easing. Given this situation, it seems specs won’t want to take on the new big long exposure necessary to support a sustained price rally.
“Gold prices failed to break important resistance level”
For the week ended Aug. 9, the CFTC’s disaggregated Commitments of Traders report showed money managers increased their speculative gross long positions on Comex gold futures by 3,379 contracts to 100,013. At the same time, short positions fell by 21,500 contracts to 59,279.
Gold’s net position now stands at 40,734 contracts. This marks more than double the level of the previous week. During the survey period, gold prices managed to rise above $ 1,800. However, it failed to break any significant resistance levels.
“Continuation of short squeeze for gold prices is possible”
According to some analysts, markets are still predicting that the Fed will raise rates by another 75 basis points in September. That’s why they say that the short squeeze for gold prices can continue its course.
John Reade, chief market strategist for the World Gold Council, shared a comment on Twitter. The strategist says that most of the movement in the bottom is due to the short closing. However, he also notes that gold is starting to attract attention once again.
“Precious metal is still an important safe-haven asset”
Commodities analysts at Société Générale note that gold’s bullish bounce is an indication that investors still view the precious metal as an important safe-haven asset. In this context, analysts make the following statement:
Higher interest rates designed to combat inflation are expected to hurt economic growth. It is thought that this will increase the demand for gold. These, in turn, lead to a cutoff of the bullish response from the precious metals.
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