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Gold Fever: Just How Hot?

This group's number of net-long futures and options contracts reach "a record extreme"

by Bob Stokes
Updated: August 28, 2019

"Gold fever" is back.

As you may recall, "gold fever" was a phrase often used eight years ago to describe gold's rapid price rise.

Indeed, on Sept. 2, 2011, trader optimism had carried the Daily Sentiment Index (trade-futures.com) to 92% gold bulls. Just nine days later, the price of gold hit its all-time high of $1921.50 on Sept. 6, 2011.

With that in mind, the Aug. 26 U.S. Short Term Update reminded subscribers that:

Gold fever can run as hot as a supernova near the end of rallies, and prices often spike to a top.

Moreover, that issue of the Short Term Update showed this chart and also said:

sgdsi-full

Investor bullishness toward [Gold] remains extreme. Friday afternoon our chart showed that Managed Money Accounts are net-long 285,090 futures contracts, a near-record total. Large Speculators, a category of traders similar to Managed Money Accounts, are net-long 349,647 futures and options contracts, which is a record extreme... The bottom of our graph shows the 10-day average of the Daily Sentiment Index (trade-futures.com), which recently jumped to 91.1% gold bulls, the highest extreme since gold's peak in September 2011.

The Short Term Update goes on to discuss a possible price range for the end of gold's rally.

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