Hedge funds up bullish platinum, palladium bets near record
Platinum futures trading on the Nymex market in New York lost $13.70 an ounce to $1,115 on Monday, down from 15-month high hit last week. Palladium contracts gained slightly but stayed below $700 an ounce as the metal retreats from its highest level since June last year.
Despite today's pullback, platinum is performing better than gold in 2016 with a year to date advance of 28.5%. Sister metal palladium enjoyed its best month for nearly a decade, soaring more than 21% in July and measured from its January 12 low the metal is up over 47% or $223 an ounce.
Large futures speculators or "managed money" investors such as hedge funds have piled into platinum and palladium long contracts – bets that prices will rise – in recent weeks, pushing overall bullish positioning near all-time highs for both metals.
According to the CFTC's weekly Commitment of Traders data up to 9 August released on Friday, while hedge funds added to net longs in PGMs, gold and silver bullish bets were cut, while copper positioning turned bearish with shorts, bets that the metal could be bought back at cheaper prices in future, overwhelming longs.
Ole Hansen Head of Commodity Strategy at Saxo Bank says with platinum net-long almost eclipsing the record high from July 2014 and palladium rising for a seventh week, both metals "are now exposed to profit taking should gold falter."
The rise in PGM prices is more surprising given the fact that unlike on futures markets and in contrast to gold investors, physically-backed exchange traded funds have been shedding ounces for more than a year.
There were some inflows for palladium ETFs in July, but over the past year more than 800,000 ounces have been pulled out leaving total holdings at under 2.2 million ounces. Platinum ETFs have lost around 80,000 ounces year to date, flatlining at 2.3 million ounces and nearly half a million ounces below this time last year.