Fed tests gold upleg
Gold’s outlook and fundamentals remain really bullish.
Gold advanced to an eight-week high on Monday in relatively brisk holiday trading in the US after government data showed hedge funds increasing bullish bets for the first time in nine weeks.
Gold for delivery in February, the most active contract on the Comex market in New York, hit a high of $1,208.70 in early dealings, up 1% from Friday’s close before giving up some of those gains. If the metal manages to close above the psychologically important $1,200 an ounce level it would be the first time since November 22.
Overall bullish positioning is still 80% below July’s all-time record
Gold is up $80 an ounce since hitting post-US election lows mid-December, but remains down just under $130 from an initial but brief surge on election night as results showed a likely victory for Trump in the presidential race.
After relentless cutting back of bullish bets hedge funds or so-called managed money investors in gold futures and options grew their long positions – bets that gold will trade higher in future – by 57% last week.
Derivatives traders added to longs and cut back shorts – bets that gold can be bought back cheaper in future – lifting the net position to 5.4 million ounces from one year-lows hit at the beginning of 2017 trading.
Overall bullish positioning is still 80% below July’s all-time record of nearly 29 million ounces when gold was hitting its 2016 peak.
Go to www.tradingfloor.com
A change in sentiment is also evident among physically-backed gold ETF investors.
Each day since Trump’s victory investors in top physically gold-backed exchange traded fund – SPDR Gold Shares (NYSEARCA: GLD) – have pulled money out of the fund.
The losing streak was the longest on record – 43 trading days without net inflows. After dumping 138.8 tonnes since November 9, on Friday gold bulls were finally convinced to jump back in, picking up just under 3 tonnes.
GLD dwarfs other physically-backed gold ETFs holding more than 45% of the global total. GLD vaults now hold 808 tonnes or 26 million ounces; worth just under $31 billion.
That’s down more than $12 billion from the 2016 peak hit early July as the gold price retreats and investors liquidate their holdings.
2 Comments
Alex
“….physically gold-backed exchange traded fund – SPDR Gold Shares (NYSEARCA: GLD)”
This is highly questionable. Paper gold GLD claims to be fully backed by physical gold bullion but yet it refuses to give retail investors the right to redeem for any of these ‘claimed’ gold bullion. This fact alone would mean GLD shares are nothing more than paper at the end of the day. Furthermore, GLD’s prospectus is chalk full of weasel clauses and legal loopholes that allows the fund to get away without the full physical gold backing. One good example of this is the clause that states GLD has no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this audit loophole. I’ve also verified the following to be true and welcome everyone else to do so:
“Did anyone try calling the GLD hotline at 866▪320▪4053 in search of numerical details on GLD’s insurance? The prospectus vaguely states “The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody.” When I asked about how much of the gold was insured, the representative proceeded to act as if he didn’t know and said they were just the “marketing agent” for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors.”
“I remember there was a well documented visit by CNBC’s Bob Pisani to GLD’s gold vault. This visit was organized by GLD’s management to prove the existence of GLD’s gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this “GLD” bar was actually owned by ETF Securities.”
Wayne Waters
To many contradictatorial opinions about where the price of “gold” is going! Some say “up” some say “down”?