Gold’s futures market became smaller last week, while money managers increased their reported short positions.
That combination deserves a closer look.
The CFTC’s futures-only report shows COMEX gold open interest falling by 6,344 contracts to 406,456 between September 22 and September 29. Over the same period, Managed Money longs declined by 3,988 contracts, while shorts increased by 3,083. Almost 44% of the deterioration in the group’s net position came from the increase in shorts.
Calling this simply a liquidation of bullish positions would leave out a substantial part of the change.
Open interest counts outstanding contracts, with each contract connecting a long and a short. It measures the size of the market’s open commitments; it does not identify which participant groups are becoming more bearish. CME’s explanation distinguishes that total from trading volume and highlights the value of examining positioning by trader category.
Different groups can move in opposite directions within a shrinking market.
In this report, swap dealers’ short positions declined by 6,213 contracts, and producer/merchant shorts fell by 5,033. Those reductions occurred alongside the increase in money managers’ shorts. The weekly snapshots cannot match individual counterparties or establish why each position changed.
For us, market contraction and a bearish shift in fund positioning can coexist. Falling open interest should not be treated as reassurance that speculative selling is fading.
The distinction also matters when reading a net figure. Managed Money can become less net long through declining longs, increasing shorts, or both. This week contained both.
That is why we examine the separate long and short columns alongside open interest in our Gold & Silver COT Positioning Tracker.
Gold had fewer outstanding futures contracts at the reporting date. Within that smaller total, funds held less bullish exposure and more reported shorts.
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