Hedge funds’ bullish bets on gold jump to four-year high
Hedge funds and other large speculators boosted their net-long position in gold.
On the Comex division of the New York Mercantile Exchange, gold futures for June were hovering below $1,300 an ounce in uneventful trade, while usually volatile silver contracts for July were down slightly to $19.54 an ounce late afternoon Tuesday.
Tuesday’s quiet trade – less than 100,000 contract of 100 troy ounces of gold had changed hands compared to almost twice that on a busy day – is the exception rather than the rule.
Gold has become one of the most leveraged and high volume trades on the planet with daily transactions worth more than $240 billion across all exchanges and markets. That’s more than the Dow Jones and S&P 500 combined.
US derivatives exchange CME Group, which operates Comex, is considering introducing daily limits on price moves in gold and silver futures reports like it does on certain energy and agricultural products Reuters:
“We don’t have price limits in gold and silver. That’s something that we are looking into,” Miguel Vias, CME Group’s director of metal products, told an audience at an event held by commodities consultant CPM Group in New York.
Vias said unusually big moves and the fears of price “slippage” — the difference between the price at which a market player wants to execute an order and the price at which they are able to do so — have turned some gold and silver futures investors away.
Last year on 15 April gold dropped $130 in a single session and more than $200 over just two days without warning.
The crash took the price of the yellow metal from a high of $1,566 on the Friday to a low of $1,330 on Monday, a 15% smack down.
A convincing argument has been put forward that the drop was the result of the “shock and awe” tactics of a short seller to break the backs of the gold bulls with a 400 tonne short sale.
Two weeks ago – precisely one year after the big 2013 drop – another remarkable series of trades also prompted a quick fall in the price.
Shortly after the New York market opened volumes spiked with some 2.28 million ounces (64 tonnes) dumped onto the market in three big chunks, in an apparent attempt to knock the wind out of buyers.
Source: CME
