Dear CIGAs,

In the period covered by the latest Commitment of Traders report, gold moved up $35.

The push higher was facilitated by an influx of new money from the managed money sector to the tune of 11,400 new longs. Not unexpectedly, the new buying was offset by bank selling revealed under the Producer/Merchant/Processor/User and Swap Dealers category.

Large specs in the Other Reportables category booked some profits on their longs by sliding some of their longs into the new buying by the hedge funds.

The small spec category, aka, the general public, increased their net long position in gold but they did so mainly by a large amount of short covering (nearly 6,000). It seems as if far too many of them were caught selling gold when it dipped below $1,100 last week and were promptly blown out as gold rallied into new all time highs in terms of some of the European currencies.

All in all, the COT report is demonstrative that the speculative flows which are needed to take gold higher have returned with the massive long side liquidation now behind us.

The Dollar remains lopsidedly imbalanced to the long side but as long as key technical levels on the downside are not violated, the longs can still hold the imbalanced market together.

Click chart to enlarge in PDF format