Gold COT Report vs Price of Gold: Investigating a Tweet Claim

How closely does the price of gold follow the Committment of Traders (COT) report?

Here's a pair of Tweets from a person I follow and respect.

Note that COT reports come out on Friday for the following Tuesday. All of the dates in the following table I created are from Tuesday. The price of gold is the closing price on Tuesday. The latest COT report is as of Tuesday, June 19.

Gold Price Vs Cot Positions

There was a huge increase in the number of large spec shorts as Hickey notes. There was also a big increase from May 8 to May 15. On both occasions the price of gold sank.

However, there was a big decrease in shorts from May 1 to May 8, with the price of gold going nowhere. Also, there was a huge increase in net long positions from June 5 to June 12 and the price of gold fell a bit.

Conclusion: COT analysis alone cannot fully explain large movement (or non-movement) in the price of gold.

I do agree with Hickey that the shorts will add fuel once long accumulation starts.

Mike "Mish" Shedlock

Comments (10)
No. 1-10
GiT
GiT

When people buy, price doesn't rise. When people sell, price falls.

Brian1
Brian1

Isn't that just a function of there being more sellers than buyers?

RonJ
RonJ

The real question is why the 47% increase? Smart money or dumb money?

Stockcharts.com shows GLD with as just having made a death cross and UUP with a golden cross as of the end of May.

Ambrose_Bierce
Ambrose_Bierce

The Specs by reputation are always on the wrong side. So if the producers are hedging higher prices it begs the question when does that happen? My own OP is that the stock market bulls are nervous and they want to hedge their bets, and of course when that happens they will close their positions in gold to square their other accounts and whoosh, down she goes, all markets in tandem. Bad news good news is we aren't anywhere near support for the gold price. The stock bulls are waiting to buy the dip, and thats another case against gold, There are a couple scenarios in which gold might do well, a 70's redux scenario but that pivots on a drop in federal government spending, and try to imagine that. Rates go higher, gold goes higher, could happen.

William Landes
William Landes

There is an interesting post now on Zero Hedge/Sprott, by David Brady, re the drop in the price of gold every time it rallies to its 200 day MA since 5/24 being mostly a function of banks slamming it down with massive shorts. Anyone else seen this? Any comments? How about you, Mish? Comments?