Sunday, March 30, 2014

COMEX Gold Futures: April Open Interest Still less than February's

OI for Apr-2014 Lower than that for Feb-2014 Contract
The April and February Gold futures contracts are very popular on the COMEX.  As of last Friday, open interest (OI) in the Apr-2014 contract is 6,473 contracts.  There is 1 more weekday until first notice.  In January with 1 more day until first notice, open interest in the Feb-2014 contract was 8,993.  Also, in November 2013, with 1 day to go for first notice day the open interest for Dec-2013 gold contracts was 33,656.  However use caution when comparing to the December contract because it is typically by far the largest settlement month of the year.

OI for Apr-2013 Dropped on Friday

The chart below shows that for most of April open interest had been consistently higher during March for the Apr-2014 contract than it was during January for the Feb-2014 contract.  On Friday, however, open interest dropped below that of the Feb-2014 contract with one week day to go before first notice.















Forecast 3,000 Apr-2014 Contracts to File on First Notice Day
At the end of January 5,865 Feb-2014 contracts filed for settlement on first notice day, which was about 3,000 contracts less than open interest from the previous day.  We will probably see a similar decline in open interest on Monday, so expect about 3,500 Apr-2014 contracts to file on Monday.

Inventory was Sufficient for April
COMEX registered gold inventory of 637,592 ounces appears to be more than enough to settle only 3,000 contracts for 300,000 ounces.  Registered gold inventory is almost 200,000 ounces higher than before February when 5,865 contracts were settled.  Also, eligible gold inventory has grown by 594,436 over the last 2 weeks and is now 5% more than at the end of January.

Why all the Recent Deposits to Inventory?
All the recent deposits to eligible inventory are curious, because the gold is apparently not necessary for April settlements.  Perhaps current gold inventory is in the 'wrong' hands.  If the short, who must deliver gold in the settlement process, does not own the gold in inventory then the amount of inventory is irrelevant.  Or perhaps the bullion banks are preparing for a future month.  June is typically a big month.  Or perhaps an owner is demanding a large withdraw and recent deposits are to offset the impact.  Or perhaps the current dip in prices is being used to un-rehypothecate current inventory.  Time will tell.  Although we will probably never get to know 'the rest of the story' - good day!.

3 comments:

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