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 spiked more than $55 or over 4% to a high of $1,364.60 an ounce in late trade on Wednesday after the Federal Reserve announced no cuts to its economic stimulus program.
Chairman Ben Bernanke was expected to announce a $10 billion $20 billion reduction in the bank’s asset purchase program which was running at $85 billion a month, but a 9:1 vote put off a decision in a move that come as something of a shocker to markets.
The Fed statement cited a darkening employment outlook and said recent spikes in market interest rates and government spending cuts were “restraining economic growth.”
After a more modest initial jump, the gold rally gathered steam during a press conference after the FOMC announcement.
Bernanke explained: “As today’s decision underscores, asset purchases are not on a preset course,” adding that while it may still happen this year, it would depend on the US economic environment at the time and “confirming evidence.”
The bank’s QE program, which has pumped more than $3.6 trillion of easy money into financial markets, weakens the dollar and increases the risk of inflation.
QE burnishes gold’s status as a hedge against inflation and a storer of wealth.
The gold price has increased nearly 60% since QE1 was announced in December 2008 when the ruling price was $837 an ounce.
But the metal has retreated more than $300 in 2013 and without a strong catalyst for prices to move higher looks set to end its 13-year unbroken bull run.
Spot gold reached a high of $1,909 on August 23, 2011, while the most active contract, usually for delivery in three months hit an all-time peak on September 6, 2011 of $1921.
5 Comments
Charles Savoie
Silver also went north today. Buying silver jewelry? Avoid Tiffany & Company and James Avery Craftsman, members of the Silver Users Association. “We only provide silver—they’re jewelry designers—silver rises a dime, they become seething whiners.”
figjam
“You will never see gold at $ 1400 again “.. Who said that ?? The end is nigh..Keep printing Benny or Janet..theres nothing else they can do ..Check- MATE
JH
without a strong catalyst for prices to move higher looks set to end its 13-year unbroken bull run….what the…?
Did I miss something? nearly a trillion dollars of extra money every 14 months and there is no catalyst? The reason gold was thrashed was because big entities, and that means central banks dumped paper gold using proxy bullion banks. there was absolutely no news in any of the big drops to precipitate the sell off. Minor news on jobs, or housing were used as cover, …
……bottom line paper currency holders and producers do not want to be gazumped by gold holders and producers.
why is that so hard to comprehend??
Why the agenda here by Friks and mining.com to have bias to downside.. advertising dollars?
trigon400
It’s funny how the FED tries to make it look as if they have an option as to whether to print or not…
They don’t.
It’s as if they’re saying “We’re still not certain if we’ll breath tomorrow”.
If they’d like the SS & fed pension checks to get mailed, they must print.
Buckle up, the ride is accelerating to the violent end.
Rix
I wish mining.com had writers knowledgeable from the mining industry, not just picking up on some “mining news/issue/topic of the day” from some other source and re-writing it to look original. A fresh perspective on mining topics is what we need, not recycling news