Gold – COT Data Warns it is Time to be Wary

The Commitment of Traders data (COT) is compiled each Tuesday for release on Friday.  It reports the total number of long and short positions of futures contracts held by commercials, non-commercials and the percentages held by the largest 4 & 8 traders.  For the past ten years the commitments of speculators (non-commercials) have been in a rising trend together with the price while the commercials have made a long series of new lows (i.e. net short).  This week made all-time extreme reading in each.  The data series is only available back to 1986 so we are precluded from analyzing the two biggest bull markets; 1971 to 1974, $35 to $196 and 1976 to 1980, $103 to $875.  However, the findings of this study suggest that whatever upside action occurs in the next few weeks should be followed by a test of the breakout.  

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