Whales, smart money short $18.8M in gold ahead of Citi cut
Large traders held about $18.8 million net short in gold perpetual futures and increased put activity on GLD before Citigroup cut its three-month gold target to $4,000 from $4,300.
Whales and smart-money traders held a combined net short position of about $18.8 million in gold perpetual futures and increased buying of put options on the SPDR Gold Shares ETF (GLD) in the days before Citigroup lowered its three-month gold price target to $4,000 per ounce on June 8.
Positioning data from the perpetual futures market showed whale accounts were short roughly $12.5 million and smart-money accounts about $6.3 million. The largest short trades were opened in the $4,560 to $4,880 range and were running with unrealized profits, while many large long trades had unrealized losses after entering at higher prices.
Perpetual futures funding was positive at an annualized rate near 5.47 percent, which meant traders holding long positions were paying shorts to keep those positions open.
Options activity on GLD shifted toward puts. In early June the put-call volume ratio was about 0.64 and the open-interest ratio near 0.55. More recently the open-interest ratio rose to 0.59 and the volume ratio increased to about 1.13, indicating that trading volume in put contracts exceeded calls.
The Commodity Futures Trading Commission’s Commitments of Traders report for the week through June 2 showed total open interest fell by 27,437 contracts to 326,052. Large speculators trimmed parts of their short books while adding some longs. Commercial hedgers remained net short, with about 260,196 contracts short and 53,851 contracts long.
At the same time, Treasury yields were higher, with the 30-year near 5 percent and the 10-year around 4.55 percent. Market commentary linked tensions in the Strait of Hormuz and elevated energy prices to persistent inflation expectations and higher rate-hike odds. Commodity ratios showed a gold-silver ratio near 63.6 and a gold-oil ratio near 48.4.
Flows in perpetual futures, GLD options and regulated futures reflected a bearish tilt before Citigroup published its revision lowering the three-month target from $4,300 to $4,000.
Several bank forecasts retained longer-term bullish views on gold.
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