On Monday, gold consolidated some of its recent gains ahead of a crucial US Federal Reserve decision on interest rates this week.
On the Comex market in New York, gold futures with December delivery dates were largely unchanged at $1,164.10, up $1.40 compared to Friday’s close in quiet and cautious trade.
Gold remains up some 5% from where it was trading before the US Federal Reserve at its September meeting decided not to lift rates from near-zero, where it has been since the global financial crisis.
October 15 gold hit its highest level since June 22, amid fresh indications that a limp US economy may push the first rate hike in nine years further into the future.
Hedge funds reduced bullish bets to more than five year lows ahead of the September Fed decision, but since then large futures speculators – referred to as “managed money” – have played catch-up with the turnaround in sentiment towards gold and the fading expectations of a rate hike in 2015.
According to the CFTC’s weekly Commitment of Traders data for the week to October 20 hedge funds added more than 47% to their long positions – bets that gold will be more expensive in the future – from the week before. Last week’s rise was 66% and hedge funds have now added net long positions for five straight weeks.
Net longs now stand at 12.2 million ounces (345 tonnes), the highest since February. At the start of the year bullish positions topped out at 16.7 million ounces when gold briefly traded north of $1,300.
Speculators also made deep cuts to short positions ahead of last week’s rally – bets that gold could be bought cheaper in the future – reducing overall positions more than 20% to 3.7 million ounces, down from record highs above 11 million ounces set in July.
In late July and early August, hedge funds entered net short positions for the first time since at least 2006, when the Commodity Futures Trading Commission first began tracking the data.
