Monday, October 5, 2009

Weekly Gold COT Update (Sep 29)

Gold COT data (as of Sep 29) is slightly/moderately bullish as O/I dropped by 12.5k contracts as speculative longs and shorts dropped sharply(longs more than shorts) while Comm shorts not only decreased short positions but added 4.5k long contracts. Concentrated positions increased, especially on the short side. This action along with the sharp sell-off early in the week, followed up by the strong reversal later and firming early Sun-Mon trading put us on a bullish footing. Of course most of the action will be dependent on USD; as the contra-contrarians continue to call the short USD trade crowded and then proceed to crowd the long side we could get our breakout if 76 in $ index breaks and weak-hand USD longs are forced to liquidate. Historically Gold O/I is elevated but can easily run up to over 650k contracts on a serious break of the 1030 area.