Hedge funds’ bullish bets on gold jump to four-year high
Hedge funds and other large speculators boosted their net-long position in gold.
The gold price dropped another $25 on Wednesday, a second day of steep losses, bringing the yellow metal within shouting distance of a year low.
In afternoon trade gold was down 1.6%, changing hands for $1,550 an ounce, levels not seen since June last year.
Gold has now given up 7.4% of its value from its opening levels for the year and is homing in on a 52-week low of $1,535 set in May.
Sentiment towards gold has soured this year as investors in gold-backed ETFs continued to abandon the hard asset in favour of riskier bets like stocks, which have recently hit record highs.
Gold ETF holdings hit a peak in 2012 of more than 2,600 tonnes worth $146 billion, but net outflows from the popular investment vehicle this year has topped 7%.
ETFs have played a central role in gold’s 12-year bull run – when the products were first introduced in March 2003, an ounce of gold could be picked up for $330.
Now that the momentum appears to be going in reverse it is doing great damage to investor confidence in gold among retail and institutional buyers.
