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 Tuesday on the Comex market in New York, gold futures with December delivery dates were pushed to a five-year low by a strong dollar and waning safe haven buying following the Paris attacks.
Exchanging hands for $1,064 an ounce in early afternoon trade, gold is now trading at levels last seen in February 2010. Seemingly destined for a third down year in a row for 2015, the metal is having its worst run since 1998.
At 99.83, the USD Index is back within striking distance of 12-year highs above the 100-level struck mid-March. While nowhere near its peak of the mid-80s, the greenback has made a strong run over the past couple of years appreciating more than 23% since the November 2013.
Conventional wisdom is that the gold price and the dollar move in opposite directions as this chart shows. The dollar’s all-time peak of 164.7 was reached in February 1985. That coincided with a bottom in the price of gold of $284.25 an ounce.
Source: Capital Economics
Gold received a small bump yesterday after the weekend attacks in Paris prompted a modicum of safe haven buying, but Tuesday’s performance is another indicator that gold’s allure as a valuable asset in times of turmoil has diminished.
“Gold remains stuck at low levels showing along with oil trading that while devastating and tragic, last Friday’s terrorist attacks in Paris have not sparked a flight to safety, confirming the resilience of nations who do not back down in the face of terrorism,” Colin Cieszynski, chief market strategist at CMC Markets said in a Tuesday research note quoted by MarketWatch.
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The Gold Cartel: Government Intervention on Gold, the Mega Bubble in Paper, and What This Means for Your Future Hardcover – October 24, 2013
by Dimitri Speck (Author)