Gold Prices: Why Speculators Are Turning Bullish

Gold speculators turned bullish this past week, following two weeks of bearishness on gold prices. The latest Commitment of Traders report shows large speculators had been slightly negative on gold futures with declining trade sizes.  

This indicates two things: First, pricing of the trades showed that as gold dropped toward the $1300/oz psychological barrier, traders weren’t sure if gold could hold or if it might drop more.  Second, volume decreasing then turning around showed uncertainty in that trade – meaning traders weren’t really convinced gold was going to drop below $1300. Usually when you see large volumes on one side of a futures trade or the other, that’s a pretty good indicator of the short-term direction of prices.  

The sudden turnaround from the short side to the long side on decent volume indicates traders are more certain gold will at least hold at current prices, if not rise in the short term. While there is always uncertainty, more analysts seem to share this view.

This Gold Enthusiast sees gold as holding 1300 and rising as we head into summer, with 1365 acting as overhead resistance in the short term.  You can read more about the latest COT report at today’s featured article here.

 Related: Here’s What Inflation Data Says About Gold

About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated with a business degree, then worked with Macy's. After Macy's he spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined a well-known financial planning firm as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where he worked first for a small manufacturing consulting company, then a major university. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoken at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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