Gold prices have barely moved this week, even as ceasefire talks between the US and Iran collapse and oil swings wildly, and the proof lies in a weekly report on the situation of major traders.
This report shows a quiet delivery process under the fixed price. Large speculators leave gold while commercial hedgers step in, a type of shift that often appears before price movements.
Positioning data shows funds leaving as hedgers buy
Every week, the US Futures Regulatory Commission publishes a report, officially Commitments of Traders or COT, that shows how the largest traders are positioned in gold futures. He divides them into two groups. Commercials are producers and hedgers who are often treated as enlightened/smart money. Non-commercials are the big speculators chasing Gold trends.
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At the last reading, the two moved in opposite directions. Speculators reduced 10,314 long contracts, while trades added 5,121 long contracts and reduced short positions by 742.
That’s the saying. When the public sells to a long hedger, the gold futures positions unwind while the enlightened side quietly accumulates.
Total open interest fell by 25,836 contracts at the same time, a sign of old positions disappearing rather than new short positions accumulating. Washing while hedgers buy often represents a bottom rather than a top.
Bottom is not guaranteed. However, positioning data suggests that the smart money is seeing value near current levels as speculators give up, an early divergence that tends to appear before the price turns.
The question is why this construction is happening when the headlines scream otherwise.
Money bailed out even as talks with Iran collapsed
The wallpaper should have lit a fire under the gold. Iran broke off ceasefire talks with the United States on June 1 over Israeli attacks in Lebanon, and strikes continued throughout the region.
The oil reaction was the way the origin of war behaved. Brent crude fell by about 19% in May due to hopes for a ceasefire, then rose by more than 4% with the collapse of the talks and the return of the threat to close the Strait of Hormuz. However, it is still trading lower on a week-to-week schedule. This should have lifted precious metals.
Gold did almost nothing. The XAU/USD pair rose less than 1% on the day and only 0.46% on the week, versus Oil’s weekly decline of 6.5%. The classic safe-haven gold trade has barely responded to the collapsed peace deal.
That gap is the story. Oil is still trading in the Iran war, While gold has remained quiet, positioning data explains why. With the speculators gone, there is no quick money left to trade gold on the headlines of the war still swirling around oil. The options market shows the same caution from another angle.
GLD Options shows caution, not surrender
Options on the SPDR Gold ETF tell a cautious but not bearish story. The put/call ratio measures the number of bearish trades versus bullish calls, so a higher reading means more hedging.
Gold buying by volume more than doubled, rising from 0.26 to 0.64 in late May. New purchases jumped as the ceasefire fluctuated.
However, open interest has fallen from 0.58 to 0.55, remaining well below 1. The flat book is still leaning towards buying, so larger bets remain bullish even with higher daily hedging.
Taken together, the picture is one of dry powder. Commercial hedgers are buying futures, the options book is still leaning to the upside, and only the trend-following crowd has stepped aside.
To view prices, APMEX Manager Brett Elliott predicts that the price of gold will likely range between $4,300 and $4,725 in JuneNoting that it was traded as a risk asset linked to oil during the war.
for now, Gold price is pending On one thing: will the speculators return?
The holding of the ceasefire, which keeps pressures on oil prices and interest rates low, is the bullish case that could lead these parties to retreat. A new war that sends oil prices and interest rates higher again is likely to keep gold limited.
this post Gold ignored the collapse of the Iran deal while the smart money quietly bought appeared first on BeInCrypto.
