Welcome to the first edition of FX/Interest Rates/Metals Insight from Davian Letter Research. Published weekly it will focus on the FX, Interest Rate and Metals markets as they relate to economic trends and monetary policy. This edition will be a broad overview of FX, Interest Rates and Metals, a brief look back at 2009 and trends looking forward to 2010. Trade recommendations will come in the next edition.
Gold- Open interest continued to expand, this week by 36,290 contracts. Producers/consumers increased long positions by 4,650, short positions by 1,275. Managed money reduced long positions by 1,676 and increased shorts by a minimal 407. Non reportable traders increased long positions by 3,775, shorts by a sizeable 9,015. While gold charts look parabolic, positioning is not indicative of rampantly bullish sentiment. Regardless, at these levels, picking a direction is a short term/day trading game.
Gold- The “CNBC effect” or gold over $1000 effect or both? Regardless, everyone is talking about gold and the data reflect that anecdotal observation rather well. Last week prices continued to rise with COMEX futures closing at 1,116.7 on Friday, although at a slower pace than weeks prior. Open interest increased by 50,108. More importantly, non reportable traders increased by the most substantial of the five categories of traders, increasing long positions by 21,655, shorts by 19,572.