Analysts note that since the beginning of the year, interest in gold has declined, as investors see a significant increase in the prices of other commodities. In particular, speculative dynamics in relation to copper and palladium pushed prices to new historical highs.
And while gold continues to be an attractive asset for long-term protection against growing inflation, speculative capital will flow where there is momentum.
The CFTC's disaggregated report on trader commitments for the week showed that financial managers increased their speculative long positions on Comex gold futures by just 301 contracts, to 117,144. At the same time, short positions increased by 6,074 contracts, to 66,493 contracts.
Gold's net length is currently 50,651, which is down by 10% from the previous week. During the study period, gold prices retested the resistance level just below $ 1,800 before they faced pressure from sellers.
On Monday, American economic news played a positive role for gold investors. The ISM said its manufacturing index (PMI) for April was 60.7%, compared with March's reading of 64.7%. The data did not meet expectations, as the consensus forecast suggested that the value would be about 65.0%. The data also showed a lower trend in the labor market. The employment index declined to 55.1% from the previous level of 59.6%. At the same time, inflation continues to rise. Accordingly, gold reacted with a buying impulse.
The gold market also benefits from a change in sentiment in the bond market. Janet Yellen's inflation outlook helped hold the bond yield ceiling, which is down 2% from last week's highs.
The US Secretary Treasury expressed her assumptions about the growth of inflationary pressures, convincing that it will be temporary. She added that Biden's new spending proposals will not affect inflationary pressures because they will be spread over the next ten years.
However, not everyone agrees with this version that inflation will be volatile. So while Yellen minimizes the inflation threat, one of the world's most famous investors is worsening the situation.
At Berkshire Hathaway's AGM, CEO Warren Buffett said his company is facing increasing price pressures from various businesses and investments.
"We are seeing very significant inflation. It is very interesting. We are raising prices. People raise our prices, and this is accepted." – Buffett said.
Buffet emphasized the increase in prices in the housing sector.
This year, raw material prices have risen. Lumber and copper attracted significant investor attention as prices experienced unprecedented gains to record highs.
A lot of analysts noted that rising commodity prices could lead to more sustained inflation than expected.
While hedge funds are unhappy with gold prices, they are increasing their bullish silver rates.
The disaggregated report shows that speculative long positions with money management on silver futures rose by 2,790 contracts, that is, to 64,769 contracts on Comex. At the same time, short positions increased by only 221 contracts, namely to 28,213 contracts.
Silver's net length is currently 36,556 contracts, which is up by 7.5% from the previous week. It is at its highest level right now since the end of February.
The prices of silver, in turn, rise as improved global economic conditions continue to support industrial demand for precious metals.
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