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According to the CFTC weekly commodity report (W/E Apr.16), specs significantly reduced their exposure to gold and silver, liquidating longs in addition to growing their shorts.

Key Quotes

“Strong data in the US, growing signs of a turnaround in China, and a heightened “melt-up” rhetoric for stocks saw the market cast the yellow metal to the side. The S&P 500 topped the 2900 level for the first time since the October collapse, while interest rates and the USD churned higher as the market started to price out previously anticipated cuts. In the short term, these dynamics will likely keep a cap on gold, but as US growth slows and volatility increases, shifting asset allocations could be the next major upside catalyst.”

“Copper spec length increased marginally as more longs were added relative to news shorts, but given the continued green shoots in the Chinese economy, the spec interest is quite underwhelming. After strong beats in the PMIs and aggressive TSF prints, China also reported a rebound in housing prices along with a beat in both industrial production and GDP. In addition, news stories also suggested further stimulus could be coming for the auto sector and other consumer goods. But, despite all this good news, the red metal failed to hold above $6500/t once again, suggesting the market may want to see a trend of a recovering Chinese economy before buying in.”

“Speculators increased their length in gasoline as cracks continued to surge on the back of drawing inventories and CTA buying, which also translated into higher net length in WTI crude oil in anticipation of strong refinery demand in the coming months. Further, slumping Midland crude is keeping producers from ramping up their production, providing additional support as OPEC crude output remains contained and fraught with geopolitical risks. The US Administration’s reported intentions to send Iranian crude exports to zero, with sanctions waivers set to expire without renewal, represents the latest risk to global crude supplies.”