According to Commodity Futures Trading Commission (CFTC), hedge funds and gold investors have significantly reduced their bullish positions, since the strengthening of the US dollar amid rising bond yields continues to hold back gold.
The latest Commitments of Traders (COT) report indicates that FCMs had cut their speculative long positions in gold futures by 36,039, so as a result, it only totaled 131,057 contracts. At the same time, short positions increased by 2,296, hitting 52,823 contracts.
"Net longs in gold fell sharply after speculators were frightened by a jump in 10-year bond yields above 1% and a stronger dollar," said Ole Hansen, head of commodities strategy at Saxo Bank.
Now, the number of long positions is 78,234, which is 36% lower than the previous week's.
Accordingly, this significant drop in speculative interest led to a sharp drop in gold prices, to below $ 1,850.
Analysts believe this aggressive sell-off will continue in the market, but long-term prospects remain bullish.
There are also those who see this situation as positive. According to them, while speculators liquidate their long positions, investment demand for gold has increased.
"ETF investors seem to see the lower price as a good buying opportunity," said Carsten Fritsch, analyst at Commerzbank.
"ETF stocks increased by almost 17 tons on Friday, and almost all of the inflow came from the SPDR Gold Trust, which is mainly used by institutional investors. "
Meanwhile, although investors are actively fleeing the gold market, the silver market seems to be holding its ground.
A disaggregated report shows that silver futures fell 3,485 contracts to 69,805. At the same time, short positions rose 461 contracts to 27,861.
The number of long positions now stands at 41,944 contracts, which is 8.5% below the previous week's.