The short position in gold is almost always a positive number. Meaning, commercial traders are usually short gold futures contracts. That makes sense since most commercial short positions are hedges against a future decline in price.<\/p>\n
When gold is at a relatively low level and commercial traders expect it to be higher in the near future, the COT short interest often drops to less than 200,000 contracts.<\/p>\n
That’s what happened in March when gold was trading near $1,800 per ounce, and the commercial traders’ net-short position fell to 115,000 contracts. That was the lowest net-short position since the previous November – which also preceded a big rally in the metal.<\/p>\n
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Free Trading Resources<\/strong><\/p>\n Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n <\/p>\n The smart money wasn’t too concerned about a further decline in the price of gold. They weren’t looking to hedge their bets.<\/p>\n They wanted to profit on an upside move. And they got that move as gold blasted above $2,000 an ounce in April.<\/p>\n When gold is trading at a relatively high level and commercial traders expect the price to decrease, the COT net-short interest often rises to more than 300,000 contracts.<\/p>\n Last Friday, however, the COT report showed the “smart money” short interest had fallen to just 80,000 contracts. That’s the smallest net-short position since last November – just before gold rallied $300 in three months.<\/p>\n Historically, when the commercial traders’ net-short position gets this low, the price of gold tends to rally.<\/p>\n Traders should view the lethargic action in the price of gold over the last five months as an opportunity to buy.<\/p>\n That’s what the smart money is doing. And based on their history, there’s a good chance gold will be much higher in the months to come.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n <\/p>\n![\"Signature\"](\"https:\/\/files.jeffclarktrader.com\/global\/signatures\/jeff-clark-signature.png\")
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