Another angle to view the sentiment for gold itself is through the Commitments of Traders reports released each Friday by the Commodity and Futures Trading Commission. The reports are broken down into three categories: large speculators, small speculators and commercial hedgers. Looking at the reports over the past month, large speculators – which are mostly hedge funds and other institutional traders – have become less bearish.
I say “less bearish” rather than more bullish for a reason. What we see is that on July 28, the group was long 182,977 contracts and short 158,512 contracts, giving us a net total of long 24,465. As of August 25, the group was long 189,893 and short 119,160 contracts, for a net long position of 70,773. While the contracts held long only increased by 6,916, the contracts sold short dropped by 39,352 contracts.
Perhaps with fewer large speculators betting against gold prices – and with the turmoil in the overall stock market – gold will start to rise again and will attract concerned investors.
As for Barrick, I would look to buy it at its present price with a stop-loss at $6.35. That gives you a little room below the support in case it makes a false move down. As for the target on the upside, I think it can move back up to $8.50 with relative ease and the longer-term target of $10 looks good.
This article is brought to you courtesy of Rick Pendergraft from Wyatt Research.