Gold currently has 93,321 contracts sold short by money managers, its largest short position of the past 18 months. Back on January 5, 2016 when gold last had a larger managed money short position of 95,414 contracts, gold was trading for $1,078 per oz. Afterwards, gold exploded higher for nine straight weeks, soaring by $184 or 17.1% to $1,262 per oz!
Gold currently has a net long position of only 37,776 contracts. For gold to be trading for $1,218 per oz with such a small net long position is extremely bullish. At the very beginning of 2017, gold had a slightly larger net long position of 38,923 contracts, but gold was trading for only $1,137 per oz!
By the end of February 2017, gold’s net long position had grown back to 121,720 contracts, causing gold to explode by $116 or 10.2% to $1,253 per oz. Gold’s net long position is much more likely to increase from its current level of 37,776 contracts than decline. An increase back up to 120,000+ contracts will likely cause gold to surpass its key breakout point of $1,295 per oz and explode to $1,400 per oz in the short-term!