The position data shows that the gold short squeeze has ended, but hedge funds are moving away from silver

A three-week short squeeze on gold has ended, fuelled by renewed safe-haven demand fuelled by political uncertainty, as hedge funds move away from silver, even as gold continues to attract some bullish interest.

According to Kitco News, according to the latest trade data from the Commodity Futures Trading Commission, the three-week short squeeze on gold has ended, driven by renewed safe-haven demand fueled by political uncertainty.

Although gold prices have managed to maintain initial support above the 200-day moving average, analysts say the market needs a new catalyst to propel prices to a new all-time high above $2,000 an ounce.

"Gold rallied above $2,000 an ounce for the fourth time in six days on Friday and, like the previous three times, failed to capitalize on the breakout and then pulled back below. This is not a particularly bullish signal that last month's rally is smoking. We may still see a breakout above $2,000 an ounce, but another bullish catalyst may be needed," said Craig Erlam, senior European analyst at OANDA.

Some analysts say the Fed's tightening bias, as it looks to keep interest rates in a restricted zone for the foreseeable future, has left some investors taking a wait-and-see approach to precious metals. They say gold prices are likely to be neutral in these elevated prices until the Fed sends a clear message that the next step will be a rate cut.

"Once the market is convinced that the Fed's next move is to cut rates, and they are more certain about the timing, investors will likely continue to build long exposures. However, there could be considerable volatility in the gold market as the data remains strong. We do not expect continued progress towards the $2,100/oz target until U.S. economic data weakens significantly," said commodities analysts at TD Securities.

The Commodity Futures Trading Commission's (CFTC) Trader Positions Report for the week ended October 31 showed that total speculative long positions of fund managers in Comex gold futures increased by 17,655 contracts to 140,111 contracts. Meanwhile, short positions decreased by 1,437 contracts to 65,271 contracts.

Net longs in gold have risen to 74,840 contracts, the highest level since August. During the survey period, gold was trading around $2,000 an ounce.

Ole Hansen, head of commodity strategy at Saxo Bank, said that while gold's position is relatively low, the pace of the rally could indicate that the market is overly nervous and is about to consolidate.

"The pace of buying over the last three weeks has only exceeded once in the last 20 years, and while the relatively small net long leaves plenty of room for additional buying, it still increases the risk of a correction or, at best, a period of consolidation," Mr. Hansen said in a note on Monday. "It also helps explain why gold has struggled to gain further momentum from the post-FOMC decline in Treasury yields and the dollar."

While gold is still attracting some bullish interest, hedge funds are moving away from silver.

The classified report showed that total money management speculative long positions in Comex silver futures fell by 1,598 contracts to 28,019, while short positions increased by 1,011 contracts to 23,384.

The silver market is currently net long with 4,635 contracts. During the survey period, the price failed to maintain support above $23/oz.

Some analysts have pointed out that silver continues to struggle as fears of a global recession weigh on industrial demand for the precious metal.