Commodity analysts at TD Securities described the recent movement in gold as a tug-of-war between increasing demand driven by the COVID-19 pandemic and the Federal Reserve's desire to reduce its monthly bond purchases by the end of the year.
The latest COT report showed that CFMs in Comex ramped up their speculative long positions by 9,364 contracts to 126,636, while short positions fell by 7,002 contracts to 51,192.
Now, net gold stands at 75,444 contracts, which is 28% higher than the previous week. Prices also increased above $ 1,800, thereby winning back all the losses at the beginning of this month.
The analysts said they see upside potential in gold because sentiment among speculative investors appears to be shifting. And even if the Fed decides to cut its monthly purchases, the monetary policy will remain flexible.
Commodity analysts at SocieteGenerale also said that uncertainty over the pandemic hinders effective plans and timelines, which benefits gold.
In terms of silver, investors are still trying to find new optimism as hedge funds reduced overall risk exposure.
The COT report showed that speculative long positions in the metal fell 133 contracts to 48,094, while short positions slipped by 1,002 contracts to 37,470.
Now, the net volume is 10,624 contracts, which is relatively the same as the previous week.
SocGen analysts stressed their previous stance that silver's bearish positioning is exaggerated and the market is at risk of a correction.
And aside from silver, copper is also struggling because hedge funds also reduced their long positions in the metal.
The COT report said speculative long positions in copper dropped by 6,924 contracts to 50,793, while short positions decreased by 233 contracts to 38,526.