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According to the CFTC’s weekly commodity report (W/E Apr. 30), specs rebuilt exposure to gold last week, after hitting as low as $1,270/oz the prior week, notes the analysis team at TD Securities.

Key Quotes

“Investors covered shorts and took on new longs despite a continued melt-up in US equities as the dollar eased off the highs and US data was mixed. Indeed, the surprisingly strong GDP report was skewed by inventory builds, while PCE disappointed, which saw the market start to price in cut probabilities again. Gold is likely to stay range bound in the near term as a relatively hawkish FOMC meeting saw Fed Chair Powell state inflation weakness is transitory, likely prompting a reduction in length, but disappointing wage inflation data has since helped to see gold recover.”

“WTI crude specs reduced exposure, adding plenty of new shorts as the market frets about increased supply. Building US inventories, increasing shale production, along with fears that OPEC will respond to the Iran waiver removals with supply increases saw prices tank. While this sentiment remains prevalent it is likely specs will continue to reduce positioning, but it is unlikely OPEC production surges before the June meeting, while strong crack spreads and summer driving season suggest refiners will ramp up run rates significantly in the near term, thus tightening the market and increasing the risk of a short squeeze into June.”