Sentiment on gold and silver has been moving quickly, according to data from the Commodity Futures Trading Commission, as hedge funds continued to increase their bearish bets last week ahead of the Federal Reserve's monetary policy decision.
While the latest Commitment of Traders reports show a slight increase in bearish sentiment for gold and silver, some analysts noted that the data is retrospective as prices recovered to trade at a three-week high.
Analysts also noted that gold is on the rise as investors and traders were expecting the Fed to be more hawkish, adding that while the US central bank maintains its aggressive tightening stance, there has been a slight shift in its position.
Fed Chairman Jerome Powell said it would be wise for the central bank to slow down its pace of rate hikes as the economy begins to react to its aggressive monetary policy.
In the CFTC disaggregated Commitments of Traders report for the week of July 19, money managers increased their speculative long positions in Comex gold futures by 1,160 contracts to 92,216. At the same time, short positions rose at a faster pace by 1,515 contracts to 111,309.
During that period, the net short position in gold increased by 19,093 contracts. And gold then briefly fell below $1,700, reaching a yearly low.
But now prices are rising, and profit-taking around $1,800 per ounce is possible.Perhaps the expectations of a market reversal are too early.
As inflation data shows consumer prices remain high, this could force the Fed to remain aggressive for longer than expected.
