gene arensberg discusses the metals markets in his latest got gold report:

U.S. bank positioning

Each month the Commodities Futures Trading Commission (CFTC) publishes its Bank Participation in the Futures and Options Markets Report, which shows the positioning of reporting banks in the U.S. futures markets for commodities, including gold and silver.

The most recent report was for bank positioning as of September 1. As of that report the number of U.S. banks reporting positions in gold rose back up from two to three. The report shows that the big U.S. banks got the heck out of a big portion of their net short positioning just ahead of this breakout higher for gold. That almost has to be a bullish development (or at least a tail wind) for the yellow metal.

As of Tuesday, September 1, with gold then at $955.90, the three U.S. banks with reportable futures positions held a total of 509 contracts long gold and a total of 75,550 contracts short gold for a total net short position of 75,041 COMEX 100-ounce contracts. That was with a total open interest of 384,703 contracts open. As shown below in the Gold COT section, all commercial traders as a group (all 48 of them) reported a net short position of 216,708 contracts the same day.

A net short futures position benefits if prices fall, but could theoretically represent offsetting transactions to hedge the risk of opposite positions or financial derivatives in other markets.

For comparison, as of June 2, three reporting months prior, three reporting U.S. banks held a net short position of 123,110 gold contracts while all commercial traders as a group reported 226,521 gold contracts net short, with gold then at $981.45 and a total open interest then of 391,057 contracts.

http://www.stockhouse.com/Columnists/2009/Sept/8/Got-Gold-Report--Gold,-silver-breakout-in-action