Hedge funds slash bullish wagers on gold over Trump election win
Hedge funds and other large speculators boosted net-long positions by 11% to 197,362 as of Nov. 12, the lowest in 14 weeks.
The gold price continued to build on recent gains on Monday, with another double-digit advance to a fresh three-and-a-half month high.
In morning trade on the Comex division of the New York Mercantile Exchange, gold futures for April delivery – the most active contract – hit $1,329.90 an ounce, up $11.30 from Friday’s close.
Gold is now at its highest level since end October last year and up just short of 10% so far in 2014.
There appears to be a definite shift in sentiment this year after 2013’s dismal 28% retreat in the price of gold.
After turning gold into a one-way bet lower, large investors, primarily made up by hedge funds, have recently turned more bullish.
Long positions – bets that the price will go up – held by so-called managed money surged 8.8% to 129,791 lots in the week to February 11.
On a net basis hedge funds now hold 17% more bullish positions: net longs of 69,291 lots or 6.9 million ounces according to Commodity Futures Trading Commission data released on Friday.
Investment in physical gold trusts or gold-backed ETFs also appears to have turned a corner.
Last year net redemptions totaled more than 800 tonnes, while the dozens of funds traded around the world suffered depreciation of close to $80 billion.
Last week gold ETF holdings increased by 3.2 tonnes. While the additions are still modest February is on track to show the first monthly increase in ETF holdings since December 2012, when gold in vaults held by these funds peaked at over 2,600 tonnes.
