Gold futures speculators have maintained their net long positions relative to open interest at the highest level since 2020, a pattern established in mid-March and continuing with little change, JPMorgan data show.
Crisis momentum indicators reached extreme levels on March 8, March 11, again in mid-April, and most recently on May 20.
These momentum peaks have been followed by retracements, indicating that momentum traders may be engaging in mean-reversion or profit-taking activity after these peaks.
The significant increase in net long positions began in early March, with momentum signals pointing to a sharp increase. This surge in speculative interest in gold futures was first observed and peaked on March 8, followed by a new high on March 11.
The pattern of increased speculative positioning has continued since then, indicating continued trader interest in the gold market.
The report also notes that momentum signals, which track the speed and change of price movements, again pointed to extreme levels in mid-April.
Such signals are typically used by traders to gauge whether an asset is overbought or oversold, and can indicate possible reversals in market trends.
The most recent example of these extreme momentum levels was recorded on May 20. Each event of increased momentum was followed by a market pullback, consistent with the behavior of traders who take profits or rebalance their positions in response to the market’s rapid moves.
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