One number in the latest gold positioning data really stands out.
As of August 25, swap dealers held just 16,656 long contracts against roughly 261,683 shorts.
That puts them at around 245,027 contracts net short.
And in just one week, their net short position increased by another 16,370 contracts.
Swap dealers include large banks and institutions that often hedge physical exposure, client positions, OTC transactions, and other parts of their books.
Still, positioning this extreme is worth watching.
When strong demand enters gold from other parts of the market, dealers often end up on the opposite side, carrying increasingly large short exposure. It will be interesting to see what happens if investment demand remains strong and these positions continue to grow.
A heavily short dealer category can remain heavily short for a long time.
Right now, one of the most sophisticated groups in the gold futures market is carrying unusually large short exposure while the broader gold market remains historically strong.
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