Gold stepped $17.58 higher in the two weeks since the last Got Gold Report (GGR), as expected, but an anticipated improvement in the relationship between the metal and mining shares has so far been less than reassuring.

While most of the indicators this report follows closely remain bullish for gold and silver metal, out of an abundance of caution this report raises recommended trailing stops by one notch at least until that expected mining share improvement shows. Read more about that in the Short Term Outlook section below.

The last GGR two weeks ago lead off with: “With April-May looming, a period that has been unkind to investors long metals and mining shares in the recent past, it is particularly interesting that the largest gold futures traders on the planet have chosen to reduce net short exposure with gold trading in the $650s.”

Well, that particular indicator is still pretty interesting. As gold entered the $660s two weeks ago large commercial interests on the COMEX were willing to increase their net short exposure by about 7%. However, as gold held that level for a full week, those same commercial interests collectively reduced their net short positions by a similar measure. In other words as of the most recent (April 3) CFTC commitments of traders report the COMEX commercials were apparently not positioning as if they expect an imminent drop in gold prices. Read more about that in the COT Changes section below, including how the commercials’ net short exposure is about 168 tonnes of paper gold less than the last time gold traded at this level in February.

In the Gold ETFs and Silver ETF sections we note continued and even stepped up positive money flow (more global wealth entering the ETFs than leaving) into gold and silver exchange traded funds and dedicated readers will find other useful and timely information in the other sections of this issue of the GGR.

Since this report turned cautiously bullish on September 17 with cash market gold at $570, the global standard of wealth for over four millennia has advanced a net $104.80 or 18.4% as of Thursday’s close.

With that, let’s take a detailed look at some of the indicators this report follows closely.

COT Changes. The Tuesday 4/3 commitments of traders report (COT) shows that the COMEX large commercials (LCs) collective combined net short positions (LCNS) declined 9,026 contracts or 7% from 138,524 to 129,498 contracts net short Tuesday to Tuesday having added 8,630 contracts (also about 7%) the week prior. Gold metal closed the previous Tuesday 3/27 at $664.00 and at $664.25 this past Tuesday 4/3 on the cash market, or just about flat for the COT week. So while the metal traded flat, the total collective net short positions held by large commercial interests on the COMEX decreased by a fairly noticeable measure. Once again, when the LCNS declines on flat or higher gold we usually regard that as a positive sign short term.

It is very interesting to note that as gold arrived in the $660s again the LCNS ticked up briefly by about 7% but now has shed that up-tick plus a little. In addition, it is interesting to note that the most recent peak for the LCNS, which occurred with the February 27 COT report (183,750 contracts net short) came with gold in the $660s. Here we are again at that level for gold but the net short exposure for the COMEX commercials is over 54,000 contracts less (they are about 168 tonnes of paper gold less net short than Feb 27). That suggests that right or wrong the COMEX commercials are considerably less convinced of lower gold prices from this level than they were in February.

Since Tuesday gold added $10.00 for a last trade of $674.80 Thursday on the cash market and booked a gain of $11.06 over the calendar week.

Total COMEX gold open interest dropped 11,617 lots to 347,817 open contracts after a nearly flat dip of 292 lots the week prior. Long-term February 2008 and beyond COMEX forwards ended the current week at 40,450 or a relatively modest 11.8% of open contracts. (Please note the change to February 2008 for the back month for long forwards.)

Since the LCNS actually declined into flat gold this indicator remains on the bullish side of the gold market indicator ledger.

source news :resourceinvestor.com

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