Physical delivery, reportedly.
"My thoughts on this:
Traders looking for speculative exposure in gold futures don't wait until the last days of March to enter the April contract in size like this.
By that point, the April contract is about to enter its delivery window, which begins at the end of the month. Assume speculators would already have rolled out of it into June to avoid getting assigned physical delivery.
What we're seeing here most likely is a massive surge in open interest in April, up more than 45,000 contracts, with relatively modest volume.
That implies a wave of new, purposeful positioning rather than just churn between existing traders.
Because this increase didn't come from March...it's not just a normal roll. It's fresh buying. And because it happened right at the start of the delivery period, it raises a clear possibility: This looks like someone is intentionally positioning themselves to take delivery of a lot of physical gold and did it last minute."
Look very carefully at this chart please.
1) they're only 16,000 lots of open interest increased on the day in the June contract. But look at the volumes. Massive.
2) now look at the block trades. Block trades are large chunk volumes and they usually facilitate spreads. Note that the April and June are very close to overlapping. Not unheard of but significant in this context.
3) now look at the totals. The open interest is up total over 60k contracts.
It would not be unreasonable, pending, forensic confirmation, that someone did a very, very, very large trade rolling contracts that they were long in June to April. This would explain.
1) the muted increase in open interest in June
2) the close to matching block trade volumes
3) the massive June volume translating into very small open interest changes net in June..
Anyway, this isn't a theory this is how it happens. on a day with almost 60,000 lots of open interest increasing, gold actually could be a lot higher..
That's because the open interest was created possibly by someone who was long the June contract or another deferred contract rolling forward into April. Pushing up a deferred long into a spot purchase. Somebody's deadline may have gotten moved.
(This is just a starting point not a conclusion. There are plenty of other potentially reasonable explanations.
But generally speaking, you don't buy 45,000 lots of a contract on first notice day on a declining liquidity contract without destroying the whole market.
It's also possible they bought the June contract. And then by the end of the day they rolled it back into April)
@SemperVigilant1, @EFbullion, and Al otherwise other forensic guys.
@DtDS_WSS
If the April open interest doesn't close very quickly, you actually could see backwardation in gold futures for the first time ever as we approach April 28.
