What Was Monday Morning's Market Anomaly?

• The gold futures market's forward curve was entirely above $3,000 at last Friday's settlement, the first weekly close on record for that achievement. 

• The latest CFTC Commitments of Traders report showed noncommercial traders increased their net-long futures position from Tuesday-to-Tuesday, stopping a string of 5 consecutive weeks of a decrease in the net-long futures position. 

• The Cash Index has continued to trigger new orders on its monthly chart as well, meaning long-term investors are likely still buying. 

A connection between last week and this week, keeping in mind St. Patrick's Day was last Monday (though it seems a month ago already), continues to be the growing pot of gold. Not at the end of the rainbow, but rather as a safe-haven market. Last Friday, the cash index (GCY00) posted a weekly close above $3,000 for the first time on record. Additionally, like crude oil trading below $0 back in 2020, the fact the gold futures market’s forward curve was (and is) entirely above $3,000 is equally impressive). Early Monday morning finds the April issue (GCJ25) up another $9.00 (0.3%) on trade volume of 73,200 contracts. 

It’s also interesting to note the latest CFTC Commitments of Traders report (legacy, futures only) showed funds increased their net-long futures position in gold, stopping a string of 5 consecutive weeks of selling. This change included:

• an increase in long futures of 25,482 contracts and

• an increase in short futures of 3,650 contracts

• resulting in a net increase of 21,832 contracts

What stood out to me with the most recent numbers, positions as of Tuesday, March 18, was along with the noncommercial net-long futures position increase from Tuesday-to-Tuesday, driven by new buying interest, total open interest also grew by 22,260 contracts during that same time frame. This tells us positions counted as hedges also increased, though not by as much as previous weeks when the noncommercial net-long futures position was decreasing. 

As I told Ernest Hoffman of Kitco News last Friday, as part of the weekly poll on the gold market, it doesn't really matter how high the various gold markets are priced, it will still be viewed as a safe haven. I've heard talk of $4,000 or higher. Does this make gold, in any of its forms (cash, commodity, ETF, stocks, etc.) a better investment or safe-haven hedge against other investment sectors (e.g. a potential downtrend in US stocks)? Theoretically, a long-term investment fund likely added to its long position in the cash market as the Index took out its previous 4-month high of $2,955.40 earlier in March. This position has likely grown substantial since making a technical turn on the monthly chart with a bullish key reversal during November 2022, based solely on new 4-month highs. As the end of this month draws near, the sell-stop below the previous 4-month low would be moved up to the December 2024 mark of $2,585.11.