FX.co ★ Russia's invasion of Ukraine pushes hedge funds into precious and base metals

According to the latest data from the Commodity Futures Trading Commission, hedge funds and investment managers have been buying gold for a third straight week, placing bullish bets in the precious metal to hedge against growing geopolitical uncertainty and rising inflation threat.

Commodities analysts at Societe Generale said the gold market saw inflows of $6 billion last week. They noted that this was the fifth strongest week of inflows on record.

The CFTC disaggregated Commitment of Traders report for the week ending February 22 showed money managers increased their speculative gross long positions in Comex gold futures by 31,826 contracts to 183,356. At the same time, short positions rose by 556 contracts to 44,380.

Gold's net length now stands at 138,976 contracts, its the highest level since mid-November. Gold positions have increased by 29% compared to the previous week.

As analysts at the French Bank noted, gold prices pushed to their highest level since June, jumping $1,900 an ounce.

Since last week's survey, gold prices pushed to a nearly 2-year high to $1,976.50 an ounce, but were unable to hold those gains.

Analysts note that while safe-haven demand can be a powerful driver for the precious metal, it is also not sustainable.

Safe-haven demand is also flowing into the silver market. Hedge funds increased their bullish bets and covered their short positions, pushing prices above the psychological level of $24 an ounce.

The disaggregated report showed that money-managed speculative gross long positions in Comex silver futures rose by 2,462 contracts to 46,736. At the same time, short positions fell by 5,722 contracts to 21,087.

Silver's net length stands at 25,649 contracts, rising nearly 49% compared to the previous week.

Following the survey period, silver prices jumped to a six-month high of $25,630. Although silver prices have lost most of those gains, they have held support above $24 an ounce.

While the precious metal market has been relatively volatile, reacting to ebbs and flows of safe-haven demand, copper has remained fairly stable.

Copper's disaggregated report showed money-managed speculative gross long positions in Comex high-grade copper futures fell by 1,692 contracts to 65,026. At the same time, short positions rose by 1,662 contracts to 32,407.

Copper's net length is currently at 32,619 contracts, down 9% from the previous week. During the survey period, copper prices moved around $4.50 per pound.