Gold markets saw a significant shift in positioning this autumn, with hedge funds reducing their long bets while gold-backed ETFs reached new highs. The CFTC's Commitments of Traders report revealed that managed money, primarily hedge funds and CTAs, cut their net long positions in COMEX gold futures by 24% over six weeks, dropping from 151,315 contracts on August 25 to 114,820 contracts on October 6. This decline was driven largely by funds closing existing long positions rather than placing new short bets.
The reduction in long positions was substantial, with 32,970 contracts closed, compared to just 3,525 new short positions opened. The number of managed money traders holding long positions fell from 107 on September 1 to 81 on October 6, while short positions increased modestly from 11 to 22. Despite this exodus, the largest traders maintained their holdings, increasing their share of the net long positions from 12.3% to 15.4% of open interest.
In contrast, gold ETFs experienced a surge in demand, with global holdings rising by 67 tonnes in September to a record 4,256 tonnes, driven by approximately $10 billion in inflows. This divergence highlights a split between fast-money traders exiting futures positions and slower-moving investors continuing to accumulate physical gold.
The overall market positioning has normalized somewhat, with the managed money z-score against the last 52 weeks dropping from +1.59 in late August to +0.06, and the three-year COT Index standing at 34 out of 100. The net long position is now below 40% of its September 2019 record of 292,066 contracts. Open interest in gold futures also fell by 18% during this period, from 644,992 to 527,641 contracts.