The Commercials continued to shrink their net short position this week, although not as aggressively as in the previous 2 weeks. The net change was approximately 4000 contracts when looking at Futures and Options combined as of Tuesday Dec. 27th. Similar action occurred in Silver, where Commercials were actively adding to long positions while reducing their shorts. The action in the U.S. dollar is also noteworthy, with Commercials massively short the greenback, while both Large Speculators and Non-Reportables (small specs) are on the opposite side of the trade with extreme long positions. Hope nobody is seriously betting on the small specs winning this particular battle with the Commercials...it rarely ends well for them, to put it lightly.

Looking at the Weekly Gold chart, the test, hold, and bounce off the support at the 65wma was a decent end to 2011 for the precious metal sector, marking the 11th straight year of positive gains for bullion. Can she build on that in early 2012? We should have a reasonable clue about those prospects by next Friday hopefully.

Link to the report is below: