by Alasdair MacLeod
This was the week President Biden took office, with the promise of MMT-style economic stimulus. Gold and silver reacted by recovering some of the previous week’s falls. From last Friday’s close, gold rose $31 to trade at $1857 in today’s European morning trade, and silver rose 58 cents to $25.30 on the same timescale. Trading was subdued, with Monday being the Martin Luther King Jr public holiday in America.
In the most recently available Commitment of Traders report (12 January) there is evidence that hedge funds have begun to cut their long futures positions. This is consistent with expectations for a dollar rally and is laid out in the table below.
To reduce their net longs by over 38,000 contracts is a major change for the Managed Money category (hedge funds), much to the relief of the bullion banks, who managed to close nearly 24,000 of their net shorts. From the subsequent price action, it would appear that this trend continued into last Friday. But the bullion banks are not out of the woods by any means, as the next chart shows.