The price of gold has begun 2017 on more solid footing, posting a 1.9% gain in the first trading week of the new year. The bears came out of the woodwork this weekend to warn us that last week’s move was simply an oversold bounce. They cheered on the slight pullback in gold prices Friday, and all of them are in consensus that $1,200/oz will be a brick wall of resistance. While the trend is still in the bears’ favor, they seem to be ignoring the COT data.
The COT (Committment of Traders) data is one of my favorite indicators I use when trading commodities, and I am the most interested in the positioning of the Commercials. The Commercials are the largest powers in the marketplace, and are the users and producers of the commodity. They do not use the markets to speculate, but instead use it to sell forward/hedge their production or demand. The ability to study the Commercials movements is a huge asset, as their footprints are like those of elephants. When the commercials are at heavy net short levels you want to be cautious with your long positions. Conversely, when the commercials are heavily net long, you want to have a tight leash on short positions, and begin position yourself to the long side.
This post was published at GoldStockBull on January 9th, 2017.
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