COT basis May 24th, 2011

GOLD - as so often - provides little fresh guidance. Spreads, at 7.2% of total O/I, are increasing, perhaps showing increasing indecision; the share of O/I by category remains much as usual - Commercials 59.6%, Big Specs 31.3%, and Small Specs 9.1%. Total O/I increased, with Commercials adding shorts numerically, but not proportionately - their longs went down on both counts. All suggests UP, but not much.

Mini S&P - Commercials increased their nett long (now 8.2, from 5.0), mainly by cutting shorts. Big Specs moved to nett short (at -0.4, from plus 1.2), but have remained rather non-committal since mid-March. Small specs increased their nett short (at -7.8, from -6.2), and increased their share of total O/I (now at 13.0%), which suggests that any upmove from here could be sharp.

Currency positions continued to change sharply, but in the same direction as previously. Br Pounds showed Commercials moving to nett long, at +11.1 - only 4 weeks ago they were nett -43.2. Big Specs, on the other hand, added to nett shorts, at -12.9, while Small Specs came closer to neutral, at +1.8 (from +8.1). Their share of the total O/I is lower than usual, at 19.6% (vs Commercials at 48.5%, and Big Specs at 31.9%). Price direction looks up rather than down, especially once the Big Specs decide they're wrong to be short.

In EUROS also, positions have continued to move in the prior direction. Commercials are nett short 8.8 (from 20.8), Big Specs nett long (7.4, from 16.7), and Small Specs uncertain, at long 1.4 (from 4.1). Commercials are adding to longs, and reducing shorts, while Big Specs do the reverse - while this action continues, we'll go on bucking the price trend, and expect higher prices in due course.