According to analysts looking at the latest trade data, the gold market appears to be struggling to find momentum as hedge funds liquidating their long positions and adding to their bullish bets.

The Commodity Future Trading Commission (CFTC) disaggregated Commitments of Traders report for the week ending Aug. 25 showed money managers reduced their speculative gross long positions in Comex gold futures by 5,961 contracts to 145,055. At the same time, short positions rose by 2,628 contracts to 58,206.

During the survey period, the long liquidation helped to push gold prices to a one-week low. Gold’s net length now stands at 86,849 contracts, down 9% from the previous week.

“A further attempt to regain or indeed rise above the $2,000 mark is likely to be no easy undertaking, as there is insufficient investor interest at present,” said analysts at Commerzbank. They also noted that speculative interest in gold is at its lowest level since May 2019.

Ole Hansen, head of commodity strategy at Saxo Bank, said that a recovery in the U.S. dollar, after falling to a two-year low and higher bond yields prompted speculative investors out of gold last week.

Although Hansen does see rising volatility in gold in the short-term as the market moves through a consolidation phase, he has said that he remains long-term bullish on the yellow metal.

While gold faces growing short-term risks, commodity analysts at TD Securities said that it’s only a matter of time before hedge funds jump back into gold.

“The Fed’s unambiguous policy, seeking to lift employment and inflation for the foreseeable future, along with growing appetite for precious metals suggest that money managers will grow their long positioning in the weeks to come,” the analysts said.

Although hedge funds are turning lukewarm on gold, they remain bullish on silver.

The disaggregated report showed money-managed speculative gross long positions in Comex silver futures rose by 3,120 contracts to 61,800. At the same time, short positions fell by 2,703 contracts to 23,720.

Silver’s net length currently stands at 38,080, up 18% from the previous week.

However, the increase in speculative interest wasn’t enough to drive prices higher as silver prices fell to critical support just above $26 an ounce during the survey period.